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Lending And Real Estate: An Ingenious Combination

Lending And Real Estate: An Ingenious Combination

Consulco has recently launched its CySEC-regulated LC London Credit Fund, investing into the UK bridging finance market through its subsidiaries. The aim of the fund is to provide the opportunity to its unit holders to invest in London Property secured loans, guaranteed by prime asset type security. According to Michael Tannousis, Director of Investment Services at Consulco Group, the bridging finance market, which has risen significantly in the last decade, continues its upward trend and is expected to reach £6 billion by the end of 2021.

 

Consulco has had a strong presence in the UK real estate market and bridging finance for many years. What business activities is Consulco engaging into and what opportunities does the London market offer?

Michael Tannousis: Consulco has indeed been active in the UK since 2009 and Consulco Real Estate’s office in Soho Square is run by a strong team of experienced professionals.

 

An affiliate lending company, namely London Credit, was formed in 2011 providing bridging loans to UK borrowers and business owners. Since its inception, London Credit has been converting loans granted to UK borrowers into secure investment opportunities for well-informed and professional investors.

 

The best way to evaluate any company’s strategy is to look at past performance. London Credit’s team’s competence is evident in its track record of the past 9 years. To date, London Credit has granted over 335 loans cumulating in over £100 million and averaging robust net returns to investors of 6% p.a. at an impressive 100% collection rate.

 

It is important to mention that, in the last ten years, the bridging market has reached £5.6 billion in transactions. Despite perceived uncertainties caused by Brexit and Covid-19, the bridging finance market continues to flourish and is expected to reach £6 billion by the end of 2021.

 

GOLD: How do investors benefit by investing in Consulco’s investment schemes and what are the key characteristics of your investments?

M.T.: Investors have the opportunity to participate in the UK Finance Sector and London Credit lending business through their investment placement. The loans are granted for a period of up to 5 years and are secured with a legal charge on commercial and residential properties in London. The loans granted are up to 75% of the value of the leveraged property. This, in turn, provides a 25% safety cushion to investors against any decline in the real estate market.  Key UK legislation allows for the leveraged property to be repossessed without a court order, since the properties are not the primary residences of the borrowers. In rare cases of defaults, the London Credit team can repossess the property and complete the sale within a few months. The London real estate market is transparent, mature and very liquid.

 

GOLD: Describe the essential characteristics of the new London Credit fund.

M.T.: After almost a decade of successfully positioning London Credit in the fast-growing bridging market and to respond to the demand of institutional clients, the investment product was structured into a regulated entity. The LC London Credit AIF V.C.I.C. Public Ltd was incorporated as a private equity open-ended multicurrency alternative investment fund. The fund was approved and is authorised by the Cyprus Securities & Exchange Commission (CySEC). Its aim is to deliver a sustainable income yield to its investors, with low volatility and low correlation to mainstream asset classes.

 

As a Cyprus regulated fund, it will invest through its subsidiaries into short and medium-term London property secured loans originated, underwritten, structured and serviced by London Credit.

 

It provides well-informed and professional investors with returns of EUR 4%+, GBP 5%+ and USD 5%+ per annum which are payable quarterly. Investment in the Fund can be effected by investing in any of the six classes of shares denominated in Euro, USD and GBP whereas the minimum investment is €125,000. It requires a minimum lock-up period of one year, concurrent with a six-month redemption notice period, whereby the investors have the opportunity to place their redemption notices on a monthly basis.

 

The fund is open-ended and has a subscription value of €25 million. The investors will be provided with the Net Asset Value calculations of their investments on a monthly basis and dividends will be distributed quarterly. It is externally managed by Consulco Capital Ltd, an alternative investment fund manager licensed and regulated by CySEC.

 

GOLD: Consulco works closely with HNWIs and offers wealth management services. What investment trends do you see emerging during this period and where are most HNWIs investing their wealth?

M.T.: As interest rates continue to fall amid the slowdown in economic growth and anticipating that economic uncertainty will continue, an important question for many investors in Cyprus and abroad is where to place their investments in the current environment. We believe that investors should opt to diversify their investment portfolio by focusing on Alternative Investments. Such investments are different from traditional investment vehicles like cash, bonds and stocks. Institutional investors are often asked if alternatives are a good choice and why one should invest in these asset classes. The short answer is: diversification and low asset correlation which brings down the investors’ risk. It is proven that one of the most secure and best understood types of alternatives is real estate and credit secured by real estate.

 

Despite the current challenges faced by the pandemic, resulting in global economic uncertainty, Consulco continues to deliver stable returns to its investors. The sources of Consulco’s success are many. With headquarters in Cyprus and over 110 employees based in Nicosia, Consulco has global exposure in financial hubs such as London, Dubai and Moscow and is led by a proficient and stable management team. Our resilience is fostered by our strategy ‘Absolute Focus, Zero Compromise’. We look forward to the next years with utmost confidence – not because it is going to be an easy time (it will certainly not be!) but because we are well prepared for what lies ahead.

 

*The interview appeared in GOLD Magazine October Issue 

 

 

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