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Personal Wealth: property investment

We have two interesting articles on property investment. Simon and Claire Cheek of Teton; and further below John Casson and Steve Gilson of Imagine Murcia.

Personal wealth: 'Too good to be true?' A highly successful private, property investment fund appraised by Stuart Cheek.

With over 25 years experience in the City Stuart Cheek joined UBS in 1996 and is currently Head of UK Government Bond Sales. Prior to this role Stuart was a Senior Partner at Cantor Fitzgerald LP and has worked on the Stock Exchange, London International Financial Futures Exchange and Chicago Board of Trade. Stuart has been an active investor in property for over 10 years.

In my City career I have exercised both extreme caution and taken outright gambles in my personal investments. I have learnt that ultimately the one and only thing that matters is trust. You have to trust the people with whom you invest. It makes no difference what returns are promised or how regulated or established the institution. They all have the ability to loose your money either by accident normally, incompetence occasionally or fraud sadly not rarely enough.

In my experience when something appears 'too good to be true', it invariably is; so you can imagine how delighted I was when two years ago I stumbled onto an investment that has turned out significantly better than I ever anticipated.

It came about as a result of a conversation I had with a good friend who is a professional footballer. We were discussing the situation at Wrexham AFC - they had gone into administration. The football club at that time owned a very large car park next to the ground and clearly there was potential for a property play. Over the years I had dabbled in the odd land and property deal although nothing terribly adventurous or rewarding, but it enabled me to call on a contact to evaluate the viability of a potential deal.

When the numbers came through they did not stack up. A mutual friend suggested I run them by David Maxwell and Kevin Charlton, Directors of Cleland Capital. Sure enough, they confirmed my suspicions that the deal was not worth pursuing. However David and Kevin mentioned they had property projects that could be of interest. So I met the Cleland guys and was immediately impressed. The fact that I had approached them via a mutual friend gave me comfort.

My instincts did not let me down as the very first investment project for my wife and I returned 100% IRR. From this point forward a group of friends and family were tempted to invest in the next project and they too saw excellent returns. As Cleland started to expand into Europe they approached me citing it is easier and more expedient to deal with a group of private investors. Cleland wanted to look at projects with us on a more exclusive basis.

Our engagement evolved into a quasi fund of around 30 investors investing in Cleland sourced investment projects. This fund is not fully regulated as it would have proved prohibitively expensive and furthermore neither David nor Kevin of Cleland are SFA registered fund managers. David holds a Degree in Real Estate Finance from Cambridge and Kevin has over 20 years experience and contacts in the construction business. A chalk and cheese combination that works extremely well.

Although I had an instant rapport with David and Kevin, it was the structure that helped me get over the 'too good to be true' hurdle.

The first 15% return goes to the investor with the balance split 50/50 with Cleland. Clearly, this means that any project, be it commercial or residential, must have an impressive in-built profit margin for it to even be considered. This also allows for the potential fantastic returns that we have reaped so far and hope will continue. Typically, David looks to return to investors an IRR of 30 to 50%.

Our success has seen more people wanting to be involved in UK and European investments, which recently led to my wife, Claire Cheek, leaving her role as business manager of a hedge fund to set up Teton Management. Teton functions between the investors and Cleland to micromanage both the funds and investments allowing David and Kevin to concentrate totally on projects.

Establishing Teton has enabled more efficient sourcing of projects and better communication to investors with more frequent updates on status and financial statements. Cleland and Teton have together been able to attract larger investors, both individual and investment funds, leading to larger projects being incorporated into the portfolio.

Recently a major UK housebuilder (HB) approached Cleland with a view to setting up a joint venture in which Cleland and Teton introduce investors in return for access to the HB's own projects. This initiative is founded on the excellent personal relationships between the HB and the Cleland Directors, coupled with the ability of Teton to bring in active investors via the shortest route.

Clearly this tie up opens up very different avenues and exposes investors should they so choose to a much wider variety of property investments. With expansion in the UK and increasing exposure to Europe the future promises to be very exciting.

The challenge now is for Cleland to continue to source projects to meet increasing demand. Our investor base is growing. And existing investors are now electing to invest larger sums encouraged by a high target returns and a track record of positive results.

If you are interested in discussing Teton and Cleland property investment opportunities further please make contact with Claire Cheek on email, tetonproperty@btinternet.com.

Claire recently left her role as the Business Manager at Banquo Credit Management LLP in set up Teton Property Management. Before joining Banquo Claire was with the Royal Bank of Scotland, Director eVentures Group responsible for business development; prior to RBS Claire was with UBS for seven years in the FX Services Group, where she managed both the ERM and the Global e-Commerce Relationship Managers teams. Claire holds a LLB (Hons) Degree in Law from Kingston University.

Personal wealth: Imagine Murcia, a complete property investment service.

The international property market remains an attractive asset class for many investors. For former technology sector executives John Casson; GE Capital, Cabletron and Digital, and Steve Gibson; Nortel Networks and John Corporation, this sector has also provided an opportunity to employ their combined entrepreneurial and commercial skills.

Overseas property investment can be risky. In the partnership, Imagine Murcia, John and Steve provide guidance on foreign property investment within the Spanish coastal region, Murcia. 100% focused on minimising their investors risk exposure they assist in identifying desirable property developments offering high yield rental and good re-sale returns.

The region of Murcia lies in the south-east corner of Spain; it is an attractive holiday destination with 320 days sunshine on average per year and is popular with golfers, tennis players and sailing enthusiasts. Cultural diversions including roman cities and museums, and the breadth of spanish wine and food means there are a mix of leisure and entertainment pursuits.

Founded on the basis that to be competitive they should offer the equivalent price as buying direct from the developer, Andrew and Steve extend:

• Local knowledge and research of the most commercially desirable resorts and properties.
• Guidance through the purchase process including assistance with legal issues and financing, and as required regular updates on construction progress.
• After-sales support including a rental and resale programme.

Murcia benefits from both EU funded infrastructure investment and government controlled planning and the Imagine Murcia partners provide their consultancy services to the Murcia local government. With a portfolio offering the widest choice of property on and off resort in the region, recent sales data illustrates investor enthusiasm for this region:

• 60% capital appreciation in new resorts.
• 29% annual property value increase.
• 50% lower property prices than the Costa del Sol.

Properties typically range from €80,000 to €2M in value. Investors are able to buy properties off-plan and purchase in a series of instalments with the intention of either reserving the property for personal use only, or purely as a property rental investment. Rental potential at 12 weeks per year yields typically between 600-2000 euros per week.

Imagine Murcia's Golden Rules for buying in the region are:

1. Before parting with any money, check to see that it is refundable.
2. Ask about bank guarantees - if they are not given, don't buy.
3. Always use the services of a reputable Spanish lawyer.
4. Check building planning permission.
5. Ensure that you are able to re-sell the property prior to completion.
6. Work with an agent that can offer resale and rental assistance.

To find about more about Imagine Murcia visit www.imaginemurcia.com or contact Steve Gibson at steve.gibson@imaginemurcia.com.