Risk factors explained

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Prior to making any investment decision, it is important to read in detail the risks described below. The Berryhill Property bond is secured against company assets, but there are risks attached to such investments and prospective investors should consider carefully whether an investment in the bond is suitable in light of their personal circumstances, tax position and the financial resources available to them.

We would recommend all prospective investors seek advice from a stockbroker, accountant, fund manager or independent financial advisor authorised under FSMA before making the decision to invest.

The Company’s business, financial condition or operations could be materially and adversely affected by the occurrence of any of the risks described below.

General risks

Asset values may go down as well as up, therefore investors may receive less than their original investment back. Investors cannot evaluate future profitability from past performances.

Execution and costs risks

The Company may find that the cost or risks associated with buying the properties are in excess of the sums set aside, or are in excess of the amounts required to provide the returns identified in this document as being available.

Development risk

Property development carries execution risk. Unanticipated situations may arise and can affect builders, surveyors or contractors. These situations can cause increased cost, a delay or even failure of the project.

Value of the properties

The market value of properties can go down as well as up. The Directors seek to minimise risk but it is not possible to remove risk completely. If the situation arises that property value goes down, it will adversely affect the financial stability of the company.

Hidden defects

Whilst the Directors will take steps to survey the properties, there may be hidden defects which are not apparent or identified and which may later affect the properties’ rental income and ultimate sale price.

Risk on exit and lack of interest and/or capital return

Property is dependent on market conditions. Funds to pay the interest will be generated from rental income from the portfolio. Any issues with rental payments will affect cash flow which could delay interest payments and/or any other recurring payments. In extreme circumstances, this may also affect the ability of the Company to trade.

Financial services compensation scheme

Subscribers will not be able to claim under the Financial Services Compensation Scheme established by the Financial Conduct Authority in the event the Company fails.

The need to raise additional capital in the future

It is difficult to accurately predict the timing, amount of future costs and therefore any need to raise any further capital. If plans from the initial business plan change or prove to be inaccurate the Company may require further financing. If it is unable to obtain any additional financing as needed, it may be required to either sell or reduce the scope of its operations. This may affect the prices expected by the Directors and in turn affect the returns.

Government and legislative change and threat of litigation

Changes in government policy, in particular taxation and stamp duty could affect return on investment. There may also be future changes to government policy in relation to tenanted properties. The tenanted property sector is highly regulated and is at threat of further regulations. If such situations occur the Company could incur unexpected costs or timings and the Company could be adversely affected.

Inflation figures predicted by the Directors may also be higher or lower than forecast. The Directors assume a rate of 2% when modelling expected returns, variations to this figure could affect the expected returns.

Liquidity of the bond

Bonds can be transferred to a third party, if approved by the Company. The bond is not listed on any stock exchange. Property is an illiquid asset class.

Forward looking statements

This Information Memorandum includes statements that are (or may deemed to be) ‘forward-looking statements’. These statements can be identified by the use of words such as ‘believes’, ‘continues’, ‘expects’, ‘intends’, ‘may’, ‘would’, ‘should’ etc. These forward looking statements are not historical facts and do carry risks and uncertainties. Forward looking statements contained in this memorandum should not be taken as representation that such trends or activities will happen in the future.