Regatta FS 1 Limited is a private limited company, which will make loans secured primarily on property developments. Investors will have a choice of two share classes: i) capital shares, which will target an 8% p.a. return; and ii) preference shares, which aim to pay an annual dividend of 6%.

Why invest

Positives

• Strategy: To fund residential property developments on a secured first- or second-charge basis.

Issues

• Diversification: As a new company, there will be few loans at the outset.

Management

Positives

• Team: The directors and team have a broad range of property and finance experience.

Issues

• Track record: Regatta is a new company, and so has no track record, although it will use the same criteria and people as P1 – so its five-year track record is relevant.

Nuts & bolts

• Governance: The company board will have no independent directors.
• Diversification: As a new company, this will be limited at the outset, but should improve over time.
• Valuation: Loans will be valued at face value, plus accrued interest less any impairments.

Fees

• Annual fees: No direct fees to Regatta or P1.
• Other fees: No performance fee. The company will have running costs, including a 1% charge payable to the administrator. P1 will also be paid directly by borrowers.

Risks

• Target returns: The target return is 8% p.a. for capital shares and 6% p.a. for preference. Modelling would suggest that this should be achievable once fully invested, although early returns may fall short until the company is fully invested.
• Investment risk: This is a higher-return strategy within the unquoted BR sector, with some underlying lending being riskier too, but partially mitigated by the fee structure. In common with most products in the non-AIM BR sector, Regatta receives a return that is significantly lower than the yield on the underlying assets.