Downing Development Finance An experienced property team.

The Financial Conduct Authority (FCA) have temporarily restricted the promotion of some bonds to unadvised retail investors from 1 January 2020, pending a consultation. 

The new rules apply only to what the FCA term 'speculative illiquid securities' (SIS). This basically means unlisted debentures or preference shares issued by a company that then uses the funds raised to lend to or invest in other companies, or to purchase or develop property that is not for its own use.

Downing Development Finance Property bond is a speculative illiquid security and therefore investment is restricted to High Net Worth or Sophisticated Investors, or those receiving advice from an FCA regulated financial adviser.

If you would like a copy of the offer document please email crowdfunding@downing.co.uk or call 020 7416 7780.

You can find out more about the FCA ruling here.

As at 31 December 2020

*loan extension granted

**Estimated LTGDV = at the time of underwriting

• DDF believes investments in property debt can produce relatively stable and predictable returns.
• Loans backed by property can be seen as lower risk and less volatile than non asset-backed investments. 
• Property loans that are backed by bricks and mortar or land can improve recovery prospects if the borrower can't repay the loan.

As with all investments, investing in DDF would have risks that you should be aware of and comfortable with before you invest.

• Your capital is at risk and returns are not guaranteed.
• Investing in smaller companies will normally involve greater risk compared to investing in larger, more established companies.
• The past performance of DDF is not a reliable indicator of its future results.
• The issuer may not generate enough money to pay the loan interest on the bond.
• Other parties have equal-ranking security over the assets of DDF, therefore assets available to satisfy the claims of bondholders in the event of a default may be divided and all capital may not be recovered.
• The borrowers may suffer from cost overruns or delay, which may impact their ability to service and repay their loan.
• DDF lends to UK borrowers in the property sector.  A material downturn in property prices would affect borrowers' ability to repay loans.
• The Financial Services Compensation Scheme (FSCS) for deposits does not apply to Downing Bonds. There may be circumstances in which investors can claim up to £85,000 of compensation where Downing LLP is unable or unlikely to honour legally enforceable obligations against it (e.g. claims for fraud or misrepresentation). However, investors will not be able to claim under the FSCS simply because a bond fails to repay capital or pay interest.  

For a full list of risks please see here.

Downing has over eight years’ experience of making loans in the UK asset-backed and property development sectors, funding more than 80 projects since 2010, totalling approximately £240 million of lending.

The DDF team is led by Parik Chandra, Partner and Head of Residential Finance. Parik has 18+ years financial services experience, with a specialism in real estate finance but with broader experience including leveraged finance, restructuring and private equity placement. He was previously a Director on the Real Estate Finance Team at Funding Circle, where he transacted over 100 development finance and bridging deals. 

Parik is supported by an investment team consisting of:

• John Pollington, Investment Director: John has wealth of experience in the financial services industry, working at institutions including Coutts, Kleinwort Benson and Investec. John has spent around 15 years funding small to medium-sized housebuilders across the UK, with projects ranging in size from a few houses up to 100 unit schemes.
• Richard Lamb, Investment Director: Richard has over 18 years’ experience in the sector and 30 years of banking experience overall, having previously held roles at Octopus Property, Triodos Bank, Unity Trust Bank, Clydesdale Bank and Barclays.
• John Pilbeam, Construction Director: John has 30 years’ wide-ranging experience gained at partner level with two major surveying practices, and roles including Head of Construction (Europe) with AIG Global Real Estate, European Projects Director with Pyramid Hotel Group and Projects Director with Shore Energy. 
• Oliver Pettafor, Loan Analyst: Oliver supports the team with the execution of new deals. Prior to Downing, Oliver worked at ICG Longbow, in the Portfolio Management and Origination teams; focusing on mezzanine debt and whole loans across a range of real estate asset classes.

1. Screening: Each deal is assessed against our lending criteria and presented to the Investment Committee for approval.
2. Due diligence: Thorough diligence is undertaken to ensure the deal dynamics are as presented. Typically, diligence streams include valuation, monitoring surveyor report, Know Your Customer (“KYC”) checks and legal diligence.
3. Commitment: Following completion of diligence, final loan documentation is issued to the borrower outlining committed loan terms.
4. Monitoring: on development projects, monthly interim reports are prepared by the monitoring surveyor, commenting on progress to date against the programme and budget. The progress of sales is closely monitored by the DDF team.
5. Repayment: of a loan is typically through the sale of units or a refinance. Once redemption funds are received, our loan security is discharged.

The effect of COVID-19 on the UK and global economies will be significant. There remains a risk that these events could ultimately impact the ability of the Issuer to make interest payments on the Bonds when they fall due, although this is not currently expected or forecast. However, we are still at the early stages of this downturn and in light of the UK government’s unprecedented economic response to COVID-19, considerable uncertainty remains. It will be a number of months before there is sufficient data to determine the impact on house prices for instance.