DevDosh Ltd Investor Protections
DevDosh Ltd has multiple protections in place to protect and reassure investors
Ring-fenced Investment Vehicle
Each SPV investment vehicle is a stand alone business entity with it’s own independent third party legal representation that acts in the best interest of the SPV and it’s investors. Unfortunately history evidences “rock solid” financial institutions that have gone bust (Bear Sterns, Lehman Brothers) and left investors high and dry with not much more than an apology. To ensure this does not happen to DevDosh Ltd clients we have structured the investment process in such a way that all capital, assets and equity are held in a separate legal entity overseen by an independent third party corporate solicitor.
All capital is paid directly to, held and administered by an independent third party commercial escrow service that works within a strict set of guidelines on behalf of the SPV investment vehicle. Unfortunately history evidences “trustworthy” financial institutions (London Capital Finance, Asset Life) who have made capital inaccessible to investors. To ensure this does not happen to DevDosh Ltd clients we have structured the investment process in such a way that all capital raised, loan payments distributed and loan repayments collected are paid directly to, held by and then redistributed to investors by an independent third party regulated commercial escrow service.
Risk Management: Top Down Appraisal
Developer applications are intensely scrutinised by independent third party property surveying professionals to gauge scheme feasibility, loan to value ratios and exit strategy requirements are met. DevDosh Ltd’s 1st charge real estate development mortgages are retained full term so investors receive the benefit of every interest payment. On that basis every commercial mortgage awarded is done so under stringent underwriting procedures which protect capital. RICS Valuers ensure physical asset value exceed capital exposure by 30% or more on entry and exit; and RICS Development Appraisal Surveyors review every stage of the entire scheme to ensure feasibility. The aim is to deliver an affordable loan to a great developer and use their loan repayments to deliver market beating returns to investors. On that basis there is no sub-prime option.
Risk Management: Loan Default
While every effort is made to only issue high quality debt, there is always a chance for unforeseen circumstances to cause a borrower to default on the loan. In this case, as with any mortgage, the security against the loan will be repossessed (land/development rights/structures thereon). Also depending upon loan terms negotiated there may be additional security such as personal guarantees and construction completion bonds to draw down. Depending on what stage the development is at a main contractor may be appointed to complete the works or the development may be sold as is. Either way the typical run out of a borrower defaulting is that the SPV increases their income therefore the investors receive a return higher than initially expected.
Risk Management: Exposure
Investor capital becomes exposed to risk when it leaves the regulated commercial escrow services bank account and is issued to the borrower in the form of a loan payment. To limit investors capital to exposure; loan payments to the borrower are released in stages. This means that only an amount sufficient to pay for the next stage of development is ever released to the borrower. The rest of the capital sits safely in the commercial escrow service account. At each stage of the developments completion an independent third party RICS Development Monitoring Surveyor conducts a site visit and ensures everything is in order and running to plan. Providing everything is up to standard the development monitoring surveyor signs off the next loan payment to the borrower. This sign off is sent to the regulated commercial escrow service who releases payment. The entire staged payment process is negotiated and written into the loan agreement. Staged payments are carefully calculated to ensure that the value of the development is always at least 30% greater than total investor exposure (capital released to borrower) in-case of default.
Surety: Performance Bond
A performance bond is an assurity paid for by the property developer. It is issued to the Special Purpose Vehicle (SPV) as a guarantee against the failure of the developer to meet their obligations as specified in the commercial mortgage loan contract. A performance bond will protect the SPV and its investors against possible losses if the developer fails to perform or is unable to deliver the property scheme within the terms of their contract. Should the developer default on the commercial mortgage contract or declare themselves bankrupt then the performance bond is activated and the surety firm underwriting the performance bond is responsible for compensating the SPV who is the ultimate beneficiary. Normally the surety firm will complete the construction project in place of the developer.
Insurance: Professional Indemnity
You will note the the preceding paragraphs are strewn with the phrase “independent third party” professional. Each of these professionals are selected for their level of experience, expertise and good standing. These professionals are members of their respective regulatory associations (Financial Conduct Authority/Royal Institute Chartered Surveyors/Solicitors Regulation Authority) and as such hold millions of pounds in professional indemnity insurance. Each of these individuals and firms has been layered into the DevDosh Ltd investment process for the benefit and safety of our investors. Should any of them under-perform then investors carry the full weight of the complaints procedure of their governing body and the reparations available through their professional indemnity insurance policy.
INVESTORS / DEVELOPERS
If you are a risk averse investor looking for the best fixed income return for your capital
If you are a property developer looking for achievable property development finance
EMEA OFFICE (os)
+44 (0) 20 7097 1333
+62 (0) 812 3644 1640
The DevDosh Ltd fixed income investment product is not suitable for everyone. Please visit our suitability page to gain a deeper understanding of your compatibility with the product. As with all investments capital is at risk and there is a chance that you will get back less than you invested.
The information on this website does not constitute or represent a financial promotion; nor it is financial advice or a personal recommendation. Do not make investment decisions based purely on the information contained on this website and seek professional advice if you are unsure of your best investment choices. We have made every effort to ensure all information on this site is accurate. However we cannot guarantee that to be the case.