Property remains a worthwhile investment: true or false? According to recent media coverage, property is sustaining its well-earned, positive prospects as an asset class in the United Kingdom, and many professionals are optimistic that the sector’s popularity is unlikely to wane in the long run.
At Braemore, we believe that fundamentals continue to be robust, as valuations and yields are still attractive relative to other asset classes. The recent slide in sterling is further strengthening the draw of UK assets for overseas investors. So, over short and medium terms, we foresee positive outcomes for the sector.
The Bank of England’s indication of an interest rate drop to 0.25% (or less) adds weight to our argument: the income that an investment in commercial property delivers, although quite possibly lower in the immediate future and inevitably liable to some fluctuation, will go on surpassing what is usually available on cash deposits.
The Government and the Bank of England have also made it plain that they are prepared to stimulate the economy through the anticipated period of uncertainty. That could mean a further injection of quantitative easing, and maybe another cut in interest rates and lower corporate taxes: all helpful and encouraging for real estate. Confidence in property portfolios is, we believe, justified, and the sector continues to provide investors with a sustainable, relatively high income in an era of lower-for-longer interest rates.
Joint venture opportunity
The environment at the moment is an unusual one, with various rather unpredictable factors at play. The best investment of all may be a conversation – or even, for those who share a common, opportunistic vision, a joint venture partnership – with a professional advisor who possesses successful experience along with the connections, agility and acuity to take advantage of opportunities presented by today’s market conditions.
In the first instance, Braemore is developing a site purchased in 2005 at Tomatin near Inverness, the gateway to the Scottish Highlands and Islands. The site formally housed a fuel station, small hotel and Little Chef, open daily from 7am till 10pm. The Tomatin Site has live planning permission for a 45 bedroom hotel. However, as a result of William Frame’s vision for investment in Scottish Food Culture and Tourism, and following significant discussions with Transport Scotland, Braemore has negotiated a more elaborate development plan to maximise the site’s potential. Now at submission stage for amended planning permission for a 97 bedroom hotel under a franchise with Holiday Inn Express, a farm shop and 200 seater restaurant, drive through bakery and food outlet, four retail units and fuel filling station, pulling on both local and national retailers and world renowned whisky brands.
As a result of the massive commitment by Transport Scotland to improve the accessibility to the Highlands, the site at Tomatin is perfectly placed for travellers on the move. Visitors from the South will soon be able to drive from all the way through Scotland to Tomatin by dual carriageway. Tomatin is a perfect stopping point for travellers on their way to the Islands off the west coast. The ferries to the Hebridean Islands of Skye, Lewis and Harris are a short drive away. The Orkneys are undeniably more accessible with a stop at Tomatin. The site is 15 miles away from the the start and finish of the North Coast 500. Never-ending back roads, wide meandering country tracks and beautiful bends through some of Scotland’s finest coastal scenery are just a few things you can expect along the North Coast 500 – Scotland’s answer to Route 66.
Optimise on Tourism
The International market for Tourism in the Highlands is prolific. Having a Quality Branded Hotel as an overnight stopover for further exploration North whilst offering a taste of everything wonderful that is Scottish, will bring significant revenues to the development. The strength of the area around Tomatin is that it has a diverse economy and the new development will generate employment as a compliment to the solid economic infrastructure that is already embedded.
Braemore’s mission is to provide quality food in both the Restaurant and Farm Shop which is locally sourced. They are in collaboration with local and national retailers to offer them an opportunity to expand their offerings on a new site, without having the outlay of build or renovation costs themselves. They will
be presented with a fully serviced unit in a sympathetic Highland setting, to optimise the promotion of their products
The feasibility study completed in July 2017 stated a build cost of c£9.5m. Braemore owns the site and is looking for funding from a mixed source of Senior Debt and Equity investment. Braemore has already had outline discussions with one of the major banks in Scotland who are keen to offer support. Once revised planning has been submitted and costs reaffirmed, this will be actively pursued.
An Equity investor may expect a consistently increasing yield over a period of 5 years as detailed in the following projections based on conservative assumptions derived from statistical analysis of hotels occupancy and room rates in the vicinity of Inverness.
Since 2005, Braemore’s vision to enhance what Scotland has to offer both residents and visitors will soon become a reality. The development of a hotel, restaurant and retail village on the site at Tomatin brings economic benefits to all involved. Utilising the knowledge and experience of the team of professionals, built over 40 years of property acquisition, Braemore is driving this project forward.
Tomatin marks the acceleration of Braemore as a market driver of excellence in the property industry. Building on a foundation of experience derived expertise and an eye for superlative opportunity in even the bleakest of settings. Braemore Opportunity and Growth Investment will derive competitive returns, balanced with stakeholder responsibility, by taking on carefully selected PRS, government backed and distressed asset scenarios.
Be different, be better – will you join the journey? Get in touch today.
Click here to find out more about William.
The Small Print
The content of this promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested.
This warning is given pursuant to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Regulations”). The communication to which this warning relates is exempt from the general restriction contained in Section 21 of the Financial Services and Markets Act 2000 (the “Act”) on the communication of invitations or inducements to engage in investment activity on the grounds that it is made only to:-
(a) Certified High Net Worth Individuals within the meaning of the Regulations. For the purposes of the Regulations a “Certified High Net Worth Individual” is somebody who has signed a certificate to the effect that in the financial year immediately preceding the date of the certificate:-
(i) The individual had an annual income to the value of £100,000 or more; or
(ii)The individual had net assets to the value of £250,000 or more excluding his primary residence, qualifying contracts of insurance, pension and any other benefits payable on death or retirement;
(b) Self-certified Sophisticated Investors within the meaning of the Regulations. For the purposes of the Regulations a “Self-certified Sophisticated Investor” is somebody who has signed a certificate to the effect that in the financial year immediately preceding the date of the certificate that at least one of the following applies:-
(i) The individual is a member of a network or syndicate of business angels and has been so for at least the last six months prior to the date of the certificate;
(ii) The individual has made more than one investment in an unlisted Braemore in the two years prior to the date of the certificate;
(iii) The individual is working or has worked in the two years prior to the date of the certificate in a professional capacity in the private equity sector or in the provision of finance for small and medium enterprises; or
(iv) The individual is currently or has been in the two years prior to the date of the certificate a director of a Braemore with an annual turnover of at least £1 million.
(c) Certified Sophisticated Investors within the meaning of the Regulations. For the purposes of the Regulations a “Certified Sophisticated Investor” is somebody who has (i) signed an declaration (in the form prescribed in the Regulations) and (ii) holds a current certificate signed by an “authorised person” (within the meaning of the Act) to the effect that he is sufficiently knowledgeable to understand the risks associated with the description of investment outlined in his declaration;
(d) High Net Worth Companies within the meaning of the Regulations. For the purposes of the Regulations a “High Net Worth Braemore” is a body corporate which has, or which is a member of the same group as an undertaking which has, a called-up share capital or net assets of not less than £500,000 if the body corporate has more than 20 members or £5 million if the body corporate has 20 members or less;
(e) High Value Trusts within the meaning of the Regulations. For the purposes of the Regulations a “High Value Trust” is one whose gross assets are £10 million or more; or
(f) Associations of High Net Worth or Sophisticated Investors within the meaning of the Regulations. For the purposes of the Regulations an “Association of High Net Worth or Sophisticated Investors” is an association, the membership of which the person making the communication believes on reasonable grounds comprises wholly or predominantly persons who are (i) Certified or Self-certified High Net Worth individuals, (ii) Certified or Self-certified Sophisticated Investors, (iii) High Net Worth Persons (being High Net Worth Companies, unincorporated associations of Certified High Net Worth Individuals or Sophisticated Investors, partnerships with net assets of not less than £5 million or High Value Trusts, all within the meaning of the Regulations). Furthermore the communication must relate only to an investment under the terms of which a person cannot incur a liability or obligation to pay or contribute more than he commits by way of investment.
Certified High Net Worth Individuals or Sophisticated Investors to whom this communication applies should have signed a certificate in the form prescribed by the Regulations within the period of one year prior to reviewing the communication.
This communication should be reviewed only by parties who are (i) Certified High Net Worth individuals, (ii) Certified or Self-certified Sophisticated Investors, (iii) High Net Worth Persons (as described above), (iv) Associations of High Net Worth or Sophisticated Investors, or (v) “authorised persons” within the meaning of the Act (together the “Authorised Recipients”). This communication should not under any circumstances be read by or distributed to any party other than the Authorised Recipients. Any party to whom this communication is addressed and who is unclear as to its terms should immediately take advice from an “authorised person” within the meaning of the Act who specialises in advising on investments of the kind in question.