# Eddie Hobbs new Brendan Investments vehicle



## LDFerguson

_ This is a very long thread. The views of the contributors are summarised in here. 

Brendan
Administrator_



Just heard Eddie on Today FM discussing [broken link removed] Pan European Property plc, of which he is a non-executive director (and presumably the principal marketeer.) I'm guessing it's not the last we'll hear of this. 

Just had a quick glance at the website - it seems like a good way to invest in European property and so would make a useful addition to a diversified portfolio. 

The brochure does make it clear but I think it's worth repeating again and again: - the fund will be 75% geared, i.e. if you invest €10,000 they will borrow another €30,000. This can multiply your return if the investments appreciate in value, but equally it can multiply your loss if investments go down. 

They also have a facility to borrow from National Irish Bank to invest in this product - borrowing the same amount as you invest. This would definitely only be suitable for those with a high appetite for risk as you'd be borrowing to invest in a fund that itself borrows. 

I have two questions - 

(1) What does everyone else think of this new fund?

(2) Was the name inspired by our great leader? 

_P.S. - As a Multi Agency Intermediary, I don't have an agency to sell this product so views epressed in this thread are personal. _


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## ClubMan

LDFerguson said:


> They also have a facility to borrow from National Irish Bank to invest in this product - borrowing the same amount as you invest.  This would definitely be suitable for those with a high appetite for risk as you'd be borrowing to invest in a fund that itself borrows.


Yikes!!! 


> Was the name inspired by our great leader?


No chance it was inspired by the _*Saint *Brendan _- as in the mental hospital in _Grangegorman_?


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## pc7

heard him on radio too, it did catch my interest because its Eddie Hobbs and I put him with saving money! Clubman you reply makes me think otherwise


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## finuser

This does seem a bit scarey. 
Exposing a geared product to the general public and then encouraging them to gear to invest in it! On top of that they are using Eddie Hobbs to entice them in. I can already hear them say "Gearing, whats that, sure if yer man Hobbs is behind it then it must be OK".


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## Guest112

Seems reasonable enough, however....................

My concerns would be that your money is locked in for ten years, similar enough to a pension except you get tax relief on a pension !!

The promoters seem individually well qualified in their respective fields but not established as a team and not established in this type of venture.

Seems the returns will manifest itself in a "capital gain" on the shares after 10 years. Let's hope the capital gains tax rate remains at 20% in ten years time.

It wasn't quite clear to me what the directors were entitled to pay themselves along the way or in respect of their founder shares at the end.


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## gonk

LDFerguson said:


> They also have a facility to borrow from National Irish Bank to invest in this product - borrowing the same amount as you invest. This would definitely be suitable for those with a high appetite for risk as you'd be borrowing to invest in a fund that itself borrows


 
This is not only extremely high risk - gearing a geared investment - but tax-inefficient. You cannot offset the cost of borrowing against any gains made. Compare this with a loan for direct investment in property where you can get interest relief on rental income from any property you own. 

Borrowing to invest in this way also limits your capacity to borrow for other purposes. Say you borrowed to invest. That money's locked away for the investment term. A couple of years later your family grows in size and you want to trade up to a bigger house - the money you owe on the investment will be taken into account by the mortgage lender when deciding how much you can borrow. 

By comparison borrowing within a syndicate or fund would not count against one's personal borrowing capacity. It would also almost always be non-recourse, i.e., if the value of the investment properties fell below the loan amount, the individual investors could not be pursued for the shortfall. This would not be the case with a loan to invest in this product.

For all these reasons, I believe offering this facility borders on recklessness.

That said, this product compares favourably with other such funds in a couple of respects: min investment of only €5k, compare to €50k, €100k or more for other funds; gains taxable at 20% as opposed to 23% in most other funds.

It compares unfavourably in terms of the investment period - money is tied up for ten years, compared to between three and seven for similar funds I've looked at.

I note they're pretty coy about possible returns - they mention projected returns in other funds of the level for which Augusta came under heavy (and I believe unwarranted) criticism on AAM and say they can do better, without naming a figure.


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## czechmate

The prospectus says there is an annual fee of 1% of the gross property value payable to the directors. As €4 of property is bought for every €1 you put in, that means there is a fee of 4% per annum on what you put in. In addition they get 20% of any return over 8% achieved. 4% per annum seems pretty astronomical, not to mind the other fees on top?

Quite apart from the fees, borrowing (at current rates, say 5%-6% with no tax relief) to invest in a company that is mainly involved in borrowing sounds to me like an extremely high risk activity.


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## janice_d

I'm a bit of a novice but kinda like the idea given that the entry point is as low as €5000. On [broken link removed] there is a link to download the [broken link removed] and a [broken link removed] which seems to give huge amount of detail, I'm wading through it at the moment and will keep ye posted.
(I'm definitely not going to borrow to invest, surely thats been a no no since the Eircom days).
Czechmate says "there is a fee of 4% per annum on what you put in."
can you tell me where you read that and maybe link to it as I cant seem to find it. Thanks J


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## Oran Man

I know it's good to be careful but is there too much negativity about this? It strikes me as the perfect vehicle to invest in property without the hassle. This is something I have dabbled in and am currently trying to get another foreign property or two up and going but find I simply haven't got the time, the knowledge or the contacts to do it the way I'd like to. If we're paying  fees to Eddie's gang, is this not fair allowing for the fact that we're using their expert time and knowledge?


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## Jim Dwyer

Finuser, please clarify what you mean by the comment -  "I can already hear them say "Gearing, whats that, sure if yer man Hobbs is behind it then it must be OK".


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## gonk

pc7 said:


> talking there on newstalk this morning about the management fees, sound quite large,


 
They are.

1% annually of the value of assets under management plus 20% of any gains in excess of 8% p.a.

Compare this with the 6th Augusta Fund, discussed here:

http://www.askaboutmoney.com/showthread.php?t=59497

Augusta charge 0.75% annually of the value of assets under management plus 15% of any gains in excess of 12.5% p.a.

Brendan Investments are much higher and they have set themselves a much lower threshold for performance bonuses. 

(By the way, my only connection with Augusta is I have an investment in one of their earlier funds. I'm just using their fees as an example, and in fact Augusta's would not be regarded as particularly cheap for this type of investment.)


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## gonk

Oran Man said:


> I know it's good to be careful but is there too much negativity about this? It strikes me as the perfect vehicle to invest in property without the hassle.


 
I agree this type of fund can be a good way of getting the benefits of a geared property investment without any hands-on effort.

In this specific case, I do think you'd be very ill-advised to gear up what is already a geared investment.

The fees are also very high especially given this is a new team with no track record.


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## dunkamania

gonk said:


> The fees are also very high especially given this is a new team with no track record.


 
But this is Eddie Hobbes,champion of the ordinary Irish person,how can it possibly fail. 

Interesting to see how much of a response they get in the current market climate.Obviously they would have done a lot better a year ago.


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## pc7

I think with Eddie's persona fronting it they will get the numbers on board, its like the remortgage ad carol voderman did people see the celeb persona and think its a good runner, (imho)


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## ClubMan

janice_d said:


> (I'm definitely not going to borrow to invest, surely thats been a no no since the Eircom days).


So presumably you should avoid this product since the gearing element *within *the fund surely means that anybody who invests is implicitly borrowing more which is also invested? The second borrowing option is *outside *of the fund so you can borrow money which is invested and then even more money is borrowed on the back of that.


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## diarmuidc

How different is the underlying asset from the index tracked by the ?
If one wants exposure to European commercial property can anyone see any disadvantages in investing using this approach?


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## Ceres

So if you put 5000 into this, are you limited to losing the 5000 only or are you liable for the extra 75% that is borrowed against your money?


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## gonk

Ceres said:


> So if you put 5000 into this, are you limited to losing the 5000 only or are you liable for the extra 75% that is borrowed against your money?


 
No, you are not liable. The borrowings within the fund would be non-recourse - that is, if the value of the fund's investment falls below the level of its borrowings, the lenders cannot pursue individual investors for the shortfall.

*This does not apply if you take up the facility to borrow money to invest in this fund!*

In this situation, in the worst case if the investment company fails with no payout to investors, you still have to repay the money you borrowed to invest. (I'm not saying, by the way, that this is likely. But presumably it is possible in an extreme situation, say a 1929 style global crash and depression.)


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## Sunny

Also bear in mind with leverage that small price changes in the underlying will tend to have large impacts on the value of your investment. As a strategy it is nothing new but why they are encouraging ordinary investors to leverage an already leveraged deal though is beyond me.


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## JohnBoy

diarmuidc said:


> How different is the underlying asset from the index tracked by the ?
> If one wants exposure to European commercial property can anyone see any disadvantages in investing using this approach?


 

Good point. Also, you can invest directly in any number of quoted property management companies. I know that threads on single stocks are not allowed here but for example you can buy shares in a UK quoted property management company (or an ETF as diarmuidc pointed out) with no annual management fee and no performance fee. 

The fee structure for this vehicle is not dissimilar to that of a hedge fund but very few hedge funds (despite what you may read in the press) gear themselves this much.


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## gonk

Bronte said:


> There are people who borrowed to invest in Eircom and made money.


 
I did, and very happy I was too. Made 27% in two weeks. That was as near a certainty as you'll ever get in life - the flotation price had to be pitched below the likely short-term share price to ensure the success of the flotation. Those who, like me, got in and out quickly did very nicely.

But availing of the loan facility to invest in this fund would be like borrowing to invest in a company which in turn was going to borrow to invest in Eircom and which would not be able to sell its Eircom shares for ten years.

Not really a very useful comparison . . .


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## Conan

The principal of this product is reasonable. For those familiar with the risk issues it should be no problem. But setting the entry level at €5,000 seems extraordinary low.

But what amazes me is the charges. If the annual management charge is 1% of the gross asset value, that represents 4% on the net asset value (NAV), the actual amount invested. The typical market charge is circa 2% of NAV. So Eddie is charging twice as much as most competitors.

And a "success fee" of 20% in excess of 8% p.a. is outrageous. 

Dare I suggest that if any other provider offered such a charging structure, Eddie would so far up the high moral mountain in condeming such that he would require an oxygen mask.


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## HighFlier

Quote :"Interesting to see how much of a response they get in the current market climate.Obviously they would have done a lot better a year ago."

I don't agree... there is still plenty money out there and it has to go somewhere.

Irish property.....No.

Equities........Roller Coaster at the moment.

Foreign Property -one off house -is possible but for many the different laws and the amount of snake oil salesmen out there is too much, also major evidence of overheating in some markets.

Deposit .....Guaranteed loss maker in real terms.

But overseas commercial still sanely priced but the small guy can't get a ticket to the game.

If I had a spare 100k tomorrow I'd give it a serious look but I would'nt borrow to do so.


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## Guest112

Like all these schemes, the guys setting it up want to take a highly disproportionate share of the profits and nothing at all of the potential loss. Given that the promoters are taking little or no risk themselves I think this litttle venture is an excellent one FOR THEM.........................


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## HighFlier

1.The brochure says that the directors will also be personal investors.

2.I dont buy the 4% argument. The management fee is 1% of the portfolio of properties. Management fees are generally related to the size and complexity of the assets under management and it dosen't matter how these assets are funded either leveraged loans or investor equity the management time is only proportional to the quantity of assets involved.

BTW before someone asks I have no relationship to either the investment or Eddie Hobbs.


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## Guest112

High Flyer

I think the point about the 4% is that the promoters are planning to pay themselves based on the amount of money they can borrow and NOT the performance or capital appreciation of the underlying assets.

For example if they receive 50million from the public through a share offer and borrow a further 150 million from the bank they will be paid 1% of 200 million. If they can convince the bank to lend them more, say 200 million they will be paid 1% of 250 million. So the more they can borrow the more they earn !!

If after one year the gross value of the assets crashes in value from 250 million to 200 million, they will still be taking out 1% of 200 million eventhough the shareholders funds have been wiped out.

Its incredible


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## Conan

HighFlier,
I dont have a problem with the annual management charge being a % of the GAV rather then the NAV. But 1% of the GAV (equivalent to 4% of the NAV) is just over the top.
I heard Eddie on some radio station yesterday and he said the Directors were only getting Director's fees of some €30,000 each. If the annual management charge is 1% of the target €1b GAV (€10m), then Eddie must have meant €30,000 a week each. Nice money if you can get it. 

I await a critical review from our army of expert financial journalists!


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## cerberos

I am extremely disappointed in Eddie getting involved with type of vehicle.

His reputation will surely suffer in the long term.

Has he simply moved in to get rich quick mode and emulation those who he has criticised?

C


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## diarmuidc

cerberos said:


> His reputation will surely suffer in the long term.


But probably not his bank balance.... 

On the Last Word he claimed that the TV stuff was just on the side for him and his real job is an advisor. Fair enough although now his job as *independent *advisor has become a lot less credible.


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## gonk

Conan said:


> I dont have a problem with the annual management charge being a % of the GAV rather then the NAV. But 1% of the GAV (equivalent to 4% of the NAV) is just over the top.


 
Compared to what? Annual fees of 0.75% to 1.00% of GAV are typical for this kind of fund. Brendan Investments' are on the high end of this scale, but I wouldn't agree they're over the top.

Where they really stand out though, is the "performance" fee. This is what the brochure says:

_It is common practice among property funds/syndicates for the promoters to earn a performance bonus on achieving certain high returns for its investors. Brendan Investments has set the rate of 8% per annum as its hurdle rate, which means that a performance bonus will only be paid if its investors receive a minimum annual return in excess of 8% per annum over the investment period. The performance bonus is calculated at 20% of the profits above the 8% per annum hurdle rate._​ 
_The purpose of linking the 8% hurdle rate with the performance bonus is to focus the Company’s Management Team on high performance for exceptional asset management and cost control, rewarding investors and their team accordingly._​ 
While it is common practice to have performance-related fees, I've never come across a geared property fund with such an absurdly low bonus threshold. 8% p.a. is not a "high" return, for a geared fund. It's actually pretty poor when you consider the extra risk gearing entails for the investor. If they meet their target of returns in excess of 16% p.a., they will net another €22.5m plus in fees.​ 
By the way, the intention is to raise €50m and borrow €150m - so the target GAV is €200m, not €1bn.​


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## ClubMan

diarmuidc said:


> But probably not his bank balance....
> 
> On the Last Word he claimed that the TV stuff was just on the side for him and his real job is an advisor. Fair enough although now his job as *independent *advisor has become a lot less credible.


Some might argue that this happened back when he was pushing _Cape Verde _property investments (without divulging any vested interest/conflict of interest?) on a chat show a good while ago?


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## dunkamania

Conan said:


> I heard Eddie on some radio station yesterday and he said the Directors were only getting Director's fees of some €30,000 each. If the annual management charge is 1% of the target €1b GAV (€10m), then Eddie must have meant €30,000 a week each.


 
You might be confusing the Directors with the Fund Manager.The Fund Manager would be the main beneficiary of the management fee,while Directors recieve fixed payments.


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## Sunny

I am surprised at the timing of this deal. With the problems in the market, it won't be easy to raise cheap bank financing which is essential. There is even an article in the FT today about changing sentiment in the commercial market in the UK and that the effects could last for years. Also German growth that they speak so strongly about in the brochure is slowing down. Also I don't share the funds enthusiasim for Algarve invesment properties and holiday homes.


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## Daddy

Philipps:  Anything to add on what Jim Power had to say on it.

Would'nt be too favourable I'd say based on what he said about Eddie Hobbs at a seminar I attended a couple of years back and I d'ont believe they get on anyway.

TV Show - Cape Verde the place to go per Eddie (maybe it is but Eddie has'nt mentioned it much since he was seen as having an involvement in some way with a company promoting CV at the time).  Damaged his reputation at the time.

Late Late Show - buried the hatchet with Pat - massive audience to air his investments - self interest here.


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## gonk

Daddy said:


> Philipps: Anything to add on what Jim Power had to say on it.
> 
> Would'nt be too favourable I'd say based on what he said about Eddie Hobbs at a seminar I attended a couple of years back and I d'ont believe they get on anyway.


 
In fairness to Eddie, it should be borne in mind that Jim Power works for Friends First, who would be major competitors in the area of geared property investment funds.


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## Daddy

True but Eddie was'nt personally into Geared Property Investments funds
at the time I attended couple of years back.

Definitely on what you say c'ant imagine Jim being 'Friendly' to Eddie on this
investment scheme.


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## LDFerguson

dunkamania said:


> You might be confusing the Directors with the Fund Manager.The Fund Manager would be the main beneficiary of the management fee,while Directors recieve fixed payments.


 
Have a look at Section 8 on page 23 of the [broken link removed].


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## Oran Man

LDFerguson said:


> I note that one of the Brendan Investments team is Richard Fitzgerald of the Oran Group. Can first-time Askaboutmoney poster Oran Man who posted the above this morning confirm if he has any connection with Brendan Investments?


 
LD Ferguson,
I can confirm that Oran Man has absolutely no connection to the Oran Group. I'm merely from Oranmore and am really only starting out on this property investment lark.


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## czechmate

janice_d said:


> Czechmate says "there is a fee of 4% per annum on what you put in."
> can you tell me where you read that and maybe link to it as I cant seem to find it. Thanks J


 
page 22 of the prospectus:  Details the 1% p.a. fee of gross asset value going to the 'property management company'.  They don't tell you what this is in terms of the net asset value (i.e. the amount you put in), but as they are borrowing 3 times for every 1 you put in, that makes it about 4% per annum of the amount you put in.


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## czechmate

gonk said:


> Compared to what? Annual fees of 0.75% to 1.00% of GAV are typical for this kind of fund. Brendan Investments' are on the high end of this scale, but I wouldn't agree they're over the top.


 
Is the comparison not versus what fund managers would normally charge you to invest your money. Isn't that normally about the 1% p.a. mark? I can't see what extra skill and judgement is merited by another 3% p.a. gone out the door. If it's typical for this kind of fund, I think any investor would have to ask why they would pay anyone 4% p.a. to invest their money. Buying properties and taking out loans to fund that isn't exactly rocket science. If it is typical then it smells a bit like a gravy train for people who set up these funds (and a big problem for anyone who invests in these in the future if the veted returns don't materialise)?


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## Rico

All Sounds a little complex,I thought I heard the great man ,(about tracker funds), if you can't understand them, dont invest.  I know a guy who set up a few german funds  and he and his buddies has made well into seven figures from management charges, then again the investors did well too but not quite as proportional well for the risk taken.


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## gonk

czechmate said:


> If it's typical for this kind of fund, I think any investor would have to ask why they would pay anyone 4% p.a. to invest their money.


 
I'm not trying to justify it, I'm just saying Brendan Investment's annual management fees are in line with other similar funds, albeit at the top end of the range. If you think this is too high, well OK, maybe this type of investment isn't for you.

What I do think is preposterous is the performance bonus. The take is 20% of any gains above a compound rate of 8% p.a.

To give an example of how undemanding a target this is, there is plenty of commercial property available in Germany at rental yields of 8% to 9%. Buy €200m worth yielding 8%, giving a gross return of €16m. Borrow €150m at a ten year fixed rate of 5.6% (EBS's current 10 year rate for buy-to-let). Interest costs are €8.4m p.a. Net yield after interest is €7.6m, or €76m over ten years - equal to about 9.75% CAR on the €50m subscribed by investors without any capital growth in the property values at all.

Now I know this is a bit simplistic and doesn't take account of tax or transaction costs and assumes there are no defaults on leases, etc, but you get the idea.


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## Oran Man

Trying to research other geared property funds on Google at the moment so as to have a good yardstick to measure against Brendan. I was expecting virtually all the major firms to have something of this type on their books but I'm finding very few. Any hints on how best to narrow my search?


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## LDFerguson

The highest-profile competitor would probably be the [broken link removed] - the leaflet I've linked to gives you an idea about the investments but not the charges, as the fund is available through a range of Hibernian lump sum investment and pension products so charges will vary depending on the product and the commission terms arranged by the intermediary.

Another comparable investment vehicle would be the [broken link removed] offerings. If you do a search here on Askaboutmoney, the Augusta investments have been discussed here before. 

P.S. - Thanks for clarifying about your lack of vested interest.


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## czechmate

gonk said:


> I'm not trying to justify it, I'm just saying Brendan Investment's annual management fees are in line with other similar funds,


 
Fair enough, but would you agree that a 4% p.a. fee for the return profile on offer here is an enormous fee to pay. I fully agree with your comments that the performance bonus is heavily weighted in favour of the directors (Eddie&pals) but I wonder why your comments do not also extend to the annual fee. My comments on fees are only in the context of the value being given for the fee being charged - I put no stock in the fact that 'that's what everyone else is charging'. That is a useless measure in my mind. If everyone is charging what I believe to be an extortionate amount of fees then my read is that it's a fat goose ready to explode.


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## Bronte

Gonk I bow to your superior knowledge when you said :

But availing of the loan facility to invest in this fund would be like borrowing to invest in a company which in turn was going to borrow to invest in Eircom and which would not be able to sell its Eircom shares for ten years.

Not really a very useful comparison . . .

End quote
Anyway this investment is too complicated for me and I think the people who run it getting 4% of which 3% is on borrowed money is really high not amind that they would get a bonus if they achieved over 8% which is way low when you consider the risks.
On another point I don't understand why everybody dislikes Mr. Hobbs, he's just peddling his particular product for his own benefit naturally, people don't have to invest in this if they don't want to?  It's not a rip off, you read the small print and you choose to partake in the gamble or not - for that is what it is.


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## gonk

czechmate said:


> Fair enough, but would you agree that a 4% p.a. fee for the return profile on offer here is an enormous fee to pay.


 
No. This has been discussed several times here on AAM and I have always made the point that the high fees as a proportion of investor's funds are a function of the fact that the fund is geared, as opposed to exceptionally high charges by the fund managers. 

To turn your argument on its head, there are plenty of ungeared property investment funds out there. If one accepts your point, these are unjustified in charging more than 0.25% of the value of property under management as an annual fee. The effort and responsibilty involved is the same, whether or not the investment is geared. I can assure you there are no such funds with fees this low.



			
				Bronte said:
			
		

> On another point I don't understand why everybody dislikes Mr. Hobbs, he's just peddling his particular product for his own benefit naturally, people don't have to invest in this if they don't want to? It's not a rip off, you read the small print and you choose to partake in the gamble or not - for that is what it is.


 
On the contrary, it _is_ a rip off. Compare Brendan Investments' fees with Friends First's Insight Property IV fund. This is a geared fund investing in UK commercial property. The Friends First fund has been running for just under 2 1/2 years and is intended to have an approximately five year term. So far, it's showing a gain after fees of 81.4% - about 27% compounded annually. If Brendan Investments do as well they will be patting themselves soundly on the back. The Friends First fees are 0.75% p.a. of the value of assets under management and a final performance fee of 10% of gains over 10% p.a. - Brendan Investments will charge *1.00%* p.a. of the value of assets under management and a final performance fee of *20%* of gains over *8%* p.a. 'Nuff said . . .


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## Dman

Yeah I agree with you in relation to the fees e.g. 20% bonus on a performance of 8% or greater seems to be alot more than the market. 

I wonder will Pat grill him over those charges tomorrow night (very unlikely)... 

However I will say this, most of the other funds (correct me if I'm wrong) that invest like this e.g. geared Euro property for a period of time eg. (5-10yrs), have a much higher min e.g. €15,000 or €20,000 and are really only aimed at very wealth people or existing clients.  
At least this one gives the average punter access. 
Although I think it's a disgrace if Eddie Hobbs or all people is encouraging people to go into debt for this type of high risk investment.


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## ClubMan

gonk said:


> On the contrary, it _is_ a rip off. Compare Brendan Investments' fees with Friends First's Insight Property IV fund. This is a geared fund investing in UK commercial property. The Friends First fund has been running for just under 2 1/2 years and is intended to have an approximately five year term. So far, it's showing a gain after fees of 81.4% - about 27% compounded annually. If Brendan Investments do as well they will be patting themselves soundly on the back. The Friends First fees are 0.75% p.a. of the value of assets under management and a final performance fee of 10% of gains over 10% p.a. - Brendan Investments will charge *1.00%* p.a. of the value of assets under management and a final performance fee of *20%* of gains over *8%* p.a. 'Nuff said . . .


In my opinion it's not a rip-off if it simply levies higher charges than other comparable products. It could be though if the charges are not clearly divulged such that the punter can make a reasonably informed buying decision. Oddly enough I seem to recall _Eddie Hobbs _himself attributing the term "rip-off" to simple instances of high pricing (compared to alternatives on offer) but I would not agree with his stance on such matters.


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## gonk

ClubMan said:


> In my opinion it's not a rip-off if it simply levies higher charges than other comparable products. It could be though if the charges are not clearly divulged such that the punter can make a reasonably informed buying decision.


 
Hobbs himself is quoted in today's _Irish Independent_ as saying "the fees and charges for those thinking of putting money into the fund were low."

http://www.independent.ie/business/...83641bn-property-investment-fund-1071326.html

As I mentioned in an earlier post, I've looked at quite a few of these funds and contrary to the above statement, the fees - taking into account the performance fee - are the highest I've come across for a geared property fund. That in my terms is a rip off, especially when the fund promoter is trying to characterise the fee levels as "low".

Also, this fund is unique in my experience in encouraging and providing the facility for investors to borrow to invest in a geared investment. That is financial madness.


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## gonk

Sunny said:


> Well to be fair I get all my financial investment advice from the Evening Herald!!!


 
This is investment is being pitched at a mass-market level. Many of the prospective investors would not be particularly clued in financially and might well use the likes of the Herald as a source of financial knowledge.


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## Riddler

_Moderators' Note 

Riddler and Vanuatu posted very similar views in praise of this product. When pressed, Riddler agreed that he was Vanuatu and that it was due to IT problems that he re-registered. Suspecting a conflict of interest, we asked for a declaration of interest, which he has now provided. Attempts by Riddler, Vanuatu or any other user to drag the discussion off-topic will result in the posts being deleted.

Brendan
Administrator
_

Declaration of Interest: 

 (1) No association with Brendan Investments
 (2) Will not be investing 
 (3) Know Eddie Hobbs quite well 
 (4) Independent thinker 
 (5) Know what I don't know 
 (5) Have my own opinion 


This is a curious discussion. there are a number of faults in the analysis thus far. I've read the Prospectus in detail and I've studied many syndicated schemes over several years including the ones that never make the low end of the market, the retail life unit-linked funds upon which you rely for comparison. One can't accurately comment unless one has had access to the many syndicates filled by Private Banks and Stockbrokers and by comparison Brendan Invt PLC is exceptionally well priced IMHO.

You may find the following useful;

1. The PLC aims to allocate a quater of its capacity to DEVELOPMENT. That is of large significance. I put forward that the 1% amc is fuelling this section. Development requiries highly intensive management as is extremely expensive. If it is done well the IRR is usually in the range 20% to 40%. The comparison against 100% dry investment is deeply flawed but even at that the 1% GDV is very low. The Augusta scheme to which you refer has no development, 3% sales charge and a slightly lower AMC. Find a syndicate with a mix of Investment AND Development and I promise you, there will be higher charges and much less disclosure.

2. The performance bonus hurdle above 8% IRR at 20% is reasonable given the zero cost entry of the PLC and is only payable at the end. It is also superior to many development type syndicates that charge "Success" fees at exorbitant levels on top of higher AMC's and Bonuses.

3. The comparison of charges as a % of equity is bogus. It is 1% of the total equity and banking finance raised. First Time buyers don't pay 100% stamp duty or pay their solicitors 10%. 

It is remarkable in my view that nobody has remarked on the effort to bring regulation and transparency to this rather murky market. Surely, this is the new standard if concerns about consumer protection are to be observed? The unsupported comment about the ODCE pursuing Hobbs is the worst example. The Prospectus would require to disclose all material matters and if I recall he was exonerated by the High Court. 

You won't get one Bank, stockbroker, private banker or developer criticising this public scheme because it is better than most on charges and transparency. Honestly I think some anonymous posters should try to be more objective and not engage in settling grudges which comes across very strongly.


----------



## LDFerguson

Hi Riddler, 

I said at the start of this thread that it seems like a good way to invest in European property and so would make a useful addition to a diversified portfolio.

But I'm getting increasingly concerned at the nature of the hype that's being fuelled by Eddie Hobbs.  Take for example the Evening Herald article [broken link removed] - first line "...saying he could quadruple investments for members of the public..." - at first glance this would seem to be a forecast of >14% per annum growth for 10 years.  The level of disclosure on the brochure and prospectus is undeniably welcome and for the protection of consumers, but is this sort of claim in a national paper with the demographic profile of the Herald being just as protective of consumers?  My opinion is that many Herald readers will pay more attention to that claim than to the finer details of the prospectus.  



> The comparison of charges as a % of equity is bogus.


 
I disagree.  If an investor puts in €100,000, the bank borrowing is €300,000, the total value is €400,000 and the Managament Company take €4,000.  Even with my humble mathematical skills, I would call €4,000 a 4% charge on a €100,000 investment.  As an investor, I'm only interested in my return and such a charge is ultimately coming from my return so it's appropriate that it should be expressed as a percentage of my investment.  

I would also have a concern that this product is being mass-marketed by Hobbs although from what I can see on the website there will be no financial advice given by Brendan Investments.  

As a follow-on from that point, of course potential investors are free to obtain financial advice as to the suitability of this product to their needs, but this will presumably come with a charge.  Which sort of dilutes the comparison that is made on the website about the lack of entry charges being better than the 3 to 5% on other products.  The 3 to 5% typically pays for commission and financial advice.  

I agree that personalised swipes at Eddie Hobbs in this thread are not constructive (especially when they're inaccurate) but criticism of the product on its own merits is very useful in a forum like this.


----------



## Sunny

Riddler said:


> You won't get one Bank, stockbroker, private banker or developer criticising this public scheme because it is better than most on charges and transparency. Honestly I think some anonymous posters should try to be more objective and not engage in settling grudges which comes across very strongly.


 
Well then there won't any shortage of these people queing up to invest in it. If the charges are so low and the performance hurdle so reasonable, there are plenty of high net worth clients and private banking operations who will invest without the need to encourage small time investors to leverage up by borrowing to invest. Or are Eddie and the boys just doing it for the good of the small people of the country just so they can get a piece of the action??


----------



## gonk

Riddler said:


> The performance bonus hurdle above 8% IRR at 20% is reasonable given the zero cost entry of the PLC and is only payable at the end. It is also superior to many development type syndicates that charge "Success" fees at exorbitant levels on top of higher AMC's and Bonuses.


 
I have looked at quite a few syndicated property deals, maybe not as many as you, but they include non-development, development and mixed funds. None that I saw had a success fee this high levied on such a low performance target. If there is any kind of decent return on investment, this fee will dwarf even the most expensive entry charge for other comparable investments.



Riddler said:


> You won't get one Bank, stockbroker, private banker or developer criticising this public scheme because it is better than most on charges and transparency.


 
Well you certainly won't hear any criticism from NIB, who are providing loan facilities to gear up an already geared investment. Wonder how many NIB employees will be taking up this facility. (Hint: probably few to none!)



Riddler said:


> Honestly I think some anonymous posters should try to be more objective


 
I take it "Riddler" is your real name then?


----------



## JohnBoy

What are the benefits of investing in this type of investment vehicle as opposed to direct investment in a large quoted property development company?


----------



## HorseBox

Perhaps the returns would be higher?


----------



## vanuatu

Only extremely wealthy investors can directly invest in big commercial deals.


----------



## JohnBoy

I was not thinking of _direct_ investment in a single deal. 

I work for an asset management company and there are a good number of listed (i.e., publically quoted) property development / property management companies dotted accross Europe. Many of them are very sizeable, have liquid shares and have a verifable history of success. 

This is how I would get exposure to the commercial property sector in Europe.


----------



## extopia

It seems a bit like the Irish Forestry Funds and Investment plans to me (except for the gearing). Get members of the public to buy shares at a relatively low price. Shares have no voting rights. Fund employs management team made up of Fund creators. Shareholders have no say in what constitutes reasonable managment fees. 

Lots of other questions to be asked too - who does the valuation of the properties, which is critical to the remuneration of the promoters? And at the end of the term, who will buy the properties? Could the promoters set up a new fund (Fund 2) at that point and sell Fund 1's properties to the new fund? Who decides the selling price in such a case?

If this is successful, Fund 2 will be very popular, and the cycle continues, with potential pyramid effects.

Perhaps I'm overly pessimistic, but the Eddie Hobbs connection - or any attempt to use a media personality to attract the novice investor - would be enough to make me run a mile.


----------



## Riddler

It is assumed that rational people are capable of informing themselves. More so “investors” are assumed to understand or know of the nature of risk and reward. 

People are free to make up their own mind and do so using their own judgement. The quality of their own judgement is based in part on their own experiential learning, knowledge and competence. Investors either self-advise or seek advice. Again it is their choice. Of course the quality of this advice is a matter for them. 

The assumption underlying consumer protection is one of an adult-adult relationship. It is not a parent-child relationship. Is it being suggested that people should be protected from themselves? I should think not. 

One of the more interesting aspects of Brendan Investments is the disintermediation of the intermediary. It may well prove a test of investor maturity. Could this be at the heart of some of the concerns being expressed ?


----------



## MugsGame

mo3art said:


> Note:
> I have a potential conflict of interest so if I pull this post please do not be surprised.



It would be helpful if other posters on the thread would declare , as required by our posting guidelines:


> You are welcome to recommend or fairly criticize a product or company. But if you have a connection with the company or any other potential conflict of interest, please state this in your reply.


----------



## JohnBoy

> One of the more interesting aspects of Brendan Investments is the disintermediation of the intermediary. It may well prove a test of investor maturity. Could this be at the heart of some of the concerns being expressed ?


 
That is an unfair accusation.

Eddie's property vehicle has a fee structure that appears to be similar to that of a hedge fund (though I know of no hedge fund with a 10-year lock-up) and I would question how suitable such an investment vehicle is for a retail investor who can only afford to invest €5k. On balance, however, the proposed fees seem to be industry standard so Eddies is simply joining the party - caveat emptor.

I do agree with you that most investors have the ability to protect themselves but generally are too lazy to do so. I have no pity for the retail investor who fails to read the fine print and it is impossible to protect people from their own greed. No matter, after the property madness has died down, the retail investor will once again find a brand new way to loose money.


----------



## CCOVICH

Certain rambling and off topic posts have been removed as they are detracting from the specifics of the product being discussed.  It has also been noted that certain poster(s) contributing to this thread have a vested interest in the product/service being discussed.

They have 2 options:

- declare that interest in public; or
- desist from posting further

MugsGame has already drawn attention to this above and if the poster(s) in question do not take notice, they will be banned.


----------



## Riddler

Declaration of Interest: 

(1) No association with Brendan Investments
(2) Will not be investing 
(3) Know Eddie Hobbs quite well 
(4) Independent thinker 
(5) Know what I don't know 
(5) Have my own opinion


----------



## Duke of Marmalade

Brendan, you are right, the combination of the EH factor, the 5K minimum entry and the lack of remuneration for financial advice means this is destined to be a mass market execution only retail product.  In fact, I see little appetite for this amongst the usual inner circle.  This looks like 5,000 small punters paying an average 10K into a very complex and unregulated product and without quality advice.

AAM should try to address that deficiency.

A punter should be making the assessment on the following fronts (one assumes they get the general gist of such things as the length of the investment period etc.):

1)  Full understanding of the risks.

2)  Confidence that the team are up to the task (I think it is on this score that it will be shunned by the "professionals").

3)  Awareness of the true level of costs and charges.

At this point I will address only the (1).

The risks derive mainly from the high gearing.

Note there is nothing wrong with non recourse internal gearing per se.  Most equity shares are the same, get the banks to provide as much "cheap" debt as possible and maximise the risk/reward to the shareholder.

But is the gearing risk properly explained?  I don't think so.  

The Brochure puts it like this:  if the underlying investments perform +20% gearing means you enjoy 80% return.  True, and to be fair they do highlight this, if the underlying performance is -20% you lose 80%.  I'd say most punters would see that as a no-brainer, the chances of +20% over 10 years are surely much greater than the chances of -20%.

But this is a gross misrepresentation, possibly inadvertent in the interests of simplicity.

When you borrow to invest the first hurdle is to service the debt.  In addition in this case you need to fund the geared management charge.  I'd say that between debt servicing and management charge we have about 7% per annum burden before the gearing is even breaking even.  7% p.a. that's about +100% over 10 years.  Here's how the gearing risk should have been explained:

If the underling investments double over 10 years, the effect of the gearing will be neutral. If the underlying performance is +125% your return will be +200%.  If the underlying performance is +75% you will get your money back!!


----------



## Guest111

Is anyone going to attend the "workshops" with Eddie Hobbs about this product? I only caught a glimpse of the advertisement but I think there's one on in Citywest this Thursday?
In my view the great danger with this product is that people will see it as a kind of Quinlan Private for the masses. The problem is the risk profile of the two groups of investors will be so different.


----------



## MichaelDes

Regarding these terms and conditions and the general modalities of the scheme my comments are as follows

The 1% management charge on the fund value is within industry norms; especially as stated by earlier participants, property management has to be very hands on and is a credible amount to charge. What does disturb me however is the low bench mark of internal rate of return of 8% or IRR. This fund only needs to return an overall growth rate of 2% from the total fund before the principles reward themselves - taking one fifth of every percentage point over this target. The IRR is the annualised effective compounded return rate, which can be earned on the invested capital hence 8% is based on the initial money invested. Inflation rises in property prices and rent reviews should mean, even without any insightful input this target should be easily attained.

However, my initial reaction on the people directly involved is they have a skill set for making money, not necesscary through canny property opportunities but through terms and conditions which are swayed to their advantage.

I think their brochure is very non specific and not very strong on property investment strategies. Anyone believing there is still some value in either the Irish or UK commercial sectors needs their heads examined. Rental yields in both markets have been seriously compressed in recent years because of huge property value increases. London now has the highest cost per square metre compared to any other worldwide capital city. Rental return from properties either in UK or Ireland bought in 2007 is at best 4%, whilst the cost of borrowing is 4.75%+. Banks are now becoming more stringent on money lending since the sub prime debacle and this should mean capital repayments will be expected also during the 10 year investment cycle. To achieve this and for the investment to wash its face, yields would will have to be in excess of 7% - which are impossible to realise in either of these markets. As far as other area’s within the UK, London commercial in the medium term is forecast to slacken due to contraction in the services and banking sector and any deterioration in London will have a knock effect across whole of the UK. London is the only tax paying area of the UK making profit for its government and effectively every other region barring the Home Counties surrounding London are subsidised - North East England, Scotland and Northern Ireland being the highest drainers on its exchequer in ascending order.

On Germany, they are correct about opportunities within the market especially retail. In this sector, Germans for the first time in years are beginning to open their wallets and spend money. To date retail planning is a highly restricted practise compared to other EU countries and therefore the amount of retail square footage per capita of population is much lower than most other EU countries. The yields of 6% to 7.5% are presently being achieved across the board and these look set to enjoy decent rent reviews with increasing yields of 8.5% to 10.5% by 2009 - these for years have been stagnant due to depressed spending activities. Office space especially in the south western regions can also return up to 10% presently so it is also a good area to investment. Finally Germany is introducing real estate investment trusts (REIT’s) from hopefully about 2009, which will stimulate the market and create new avenues of cash flow and liquidity.

I do not know much about Portugal but I would have thought similar to Spain it has a lot of sub prime borrowing, and to much residential development in the last decade, especially within the holiday homes sector. Any affect on the residential market could have implications for its commercial sector and general economy.

Although the 8% IRR should be a given on an investment vehicle with a 75% debt ratio, this could be in doubt if they consider some of the above locations - a burning of investors money could ensue as you are only as strong as your weakest link with debt gearing - however this will not be a negative equity product after its ten years but I do not think it will not set the stars alight either.

Regarding the future of property - the stimulus behind property growth in what I would describe as “mature property markets” such as Ireland, UK and Portugal (Spain, certain area’s of the States, Dubai etc are the same) has been kept bumping along fantastically as a result of nothing other than the world economy been driven by a huge credit market - which is sadly beginning to fall apart.

The global economy (particularly America) has not seen a serious protracted recession for at least 20 years. America has staved off recession after the dot.com bubble by ridiculously cutting interest rates which caused a false sense of security but made the banks go into overdrive to learn new ways of driving the economy and making profits. Now a few years on, the good old days seem to be over as the yen carry trade (the main credit culprit) of 0.5% borrowing by world banks and investing elsewhere e.g. Australia at 7.5% interest accounts etc is over, as the yen is starting to appreciate against the dollar and the credit derivatives markets with collateralised debt obligations (CDO's), paper margins etc are now all in mass panic and this will spread to affect any market based on credit – hence property.

Agflation from wheat, corn, pork, beef plus other commodities are rising steeply and looks to me, like a re-run of the 1970's. If there is going to be a credit crunch globally with inflation rising outside the control of governments then - should recession ensue, would holiday homes in the Algarve, (which I am sure are not the cheapest) be the best investment vehicle out there to protect your income in the medium term?

I’m all for property investment because of its leverage but only within under valued regions with some strong fundamentals. If I had my say in a fund – I’d be buying farmland in either Argentina or Iowa, due to agflation, which is here for a while (corn still 75% lower than 1975). Both have seen huge rises in value of 40% to 19% respectively (2006) and since early 2006 many American & Europe Hedge funds having been buying land worldwide in blocks of 30,000 acres and spending in the billions. For any investment to work their must be good financial discipline and the fundamentals must be right – without either is sheer madness. Excess credit and inflation are like loose woman and rum – both are sure to lead to ruin. I hope the principals of Brendan Investments take this into account?


----------



## gonk

Another important factor to be taken into account when considering this investment is that although the brochure and prospectus describe in general terms the markets it is intended to invest in, there are no specific investments or projects identified.

This means that once the investors' cash is raised it will take some time to identify suitable investments. In the interim, presumably the cash will be on deposit somewhere and definitely won't be growing at Brendan Investments' targetted 16% p.a. after management charges.

It is not unknown for syndicated property funds to be sitting on investors' cash for up to a year while trying to choose a suitable investment. I'm not saying this will happen with Brendan Investments, but personally I would not invest in a geared property fund which did not have a clearly described specific investment in mind from the outset. 

Apart from getting your investment cash to work sooner, it also means you can make a better assessment of the fund's prospects given the more specific detail available.


----------



## MichaelDes

To borrow money for a leveraged product! To suggest it is sheer madness.


----------



## Mantus

Hobbs yesterday on radio challenged the institutions to come up with a cheaper model involving Development and Investment. He seemed confident nobody can and I would be slow to bet against him. For example the Augusta fund used here pays 1.5m upfront or 7.5% of the 20m to be raisede by the promoter in the form of commission rebates the firm will get from property sales agents. That is a conflict of interest in my book. It also pays 3% to 4% commission. The fund charge is 0.75% on the leveraged fund and it is 100% Investment properties with zero Development.

Proper internal analysis already circulating from fund managers indicates that Hobbs model is well designed. The bonus on performance will pay a lot to the promoters though. This is a competitive industry and based on a lot of the comments here it is clear that Hobbs intervention is hurting.


----------



## MugsGame

> I would be slow to bet against him.



Because you "Know Eddie Hobbs quite well" ?



> That is a conflict of interest in my book.



Ahem!


----------



## gonk

Mantus said:


> Hobbs yesterday on radio challenged the institutions to come up with a cheaper model involving Development and Investment. He seemed confident nobody can and I would be slow to bet against him. For example the Augusta fund used here pays 1.5m upfront or 7.5% of the 20m to be raisede by the promoter in the form of commission rebates the firm will get from property sales agents. That is a conflict of interest in my book. It also pays 3% to 4% commission. The fund charge is 0.75% on the leveraged fund and it is 100% Investment properties with zero Development.


 
It was me who initially drew the comparison with Augusta and I did make the point at the time that I wasn't saying they were especially cheap - but Brendan Investments' anuual management charge is one third as big again as Augusta's at *1% p.a.* *on the leveraged fund* and their performance fee is dramatically higher, which to me is the key issue on charges.

Some posters here seem to be implying that the higher *performance fees* are justifed on the basis that Brendan Investments will be investing about 25% in development projects. The individual investor only cares about returns - not whether they're involved in development or not. I stand over my opinion that the 20% charge on returns over 8% p.a. is exorbitant and I will eat my hat if Brendan Investments can point to any other comparable fund charging such a high performance fee on such a low performance target.


----------



## Mantus

Gonk, the open market price for Development is 3% pa, so a 25% allocation implies an apportioned cost of 0.75%. This in turn indicates that the 75% to investment property, by this measure, is 0.25% pa. Your analysis

Now take Hibernian Life's European Residential Property fund launhched in april. this has a MINIMUM annual charge of 1.45% to 1.55% depending on the product on top of which brokers can add a further 1% pa. So the lowest is 1.45% of the leveraged fund and the highest is 2.55% pa. There is no development.


----------



## gonk

Mantus said:


> Gonk, the open market price for Development is 3% pa, so a 25% allocation implies an apportioned cost of 0.75%. This in turn indicates that the 75% to investment property, by this measure, is 0.25% pa. Your analysis.


 
Not my analysis - yours. 

I am happy to accept that the annual management fee is in line with similar funds, if somewhat on the high side. However, if you read my earlier posts, you will see - as in my last post - the main issue I have with Brendan Investments' charges is the performance fee, which if they meet their target of performance exceeding 16% p.a. will amount to €22.5m plus, or 45% of the subscribed funds of €50m. The performance fee will kick in at a return of 8% p.a., which could only be described as mediocre to poor performance for a 75% geared fund. If the directors only achieve 8% p.a. they would deserve rebuke, not bonuses.

I will be amazed if you or anyone else can show us a comparable fund with such a high rate of performance fee on such a low performance target.


----------



## Mantus

At the IIF standard projection the RIY on the Hibernian fund reduces the gross growth from 6% to 3.6% ie over 40% at such a low, low growth. I make this point because, while the performance bonus is 20% above 8% IRR, there is no upfront fee like Augusta's 1.5m or 7.5% of the equity, there is no 3% to 4% to intermediaries and there are no "sales" fees for turning over the properties within the structure. This is why I think that Hobbs challenge will continue to go unopposed. He has clearly done is homework on the competition.


----------



## gonk

Mantus said:


> At the IIF standard projection the RIY on the Hibernian fund reduces the gross growth from 6% to 3.6% ie over 40% at such a low, low growth. I make this point because, while the performance bonus is 20% above 8% IRR, there is no upfront fee like Augusta's 1.5m or 7.5% of the equity, there is no 3% to 4% to intermediaries and there are no "sales" fees for turning over the properties within the structure. This is why I think that Hobbs challenge will continue to go unopposed. He has clearly done is homework on the competition.


 
All of the above will be dwarfed by Brendan Investments' performance fee if they meet or exceed their targetted returns. You are not comparing like with like when you refer to the Hiberrnian fund. If Brendan Investments were subject to the Irish Insurance Federation standard projection, they wouldn't be able to make claims like the one in the brochure that they will outperform all the competition and achieve returns in excess of 16% p.a.


----------



## Duke of Marmalade

_



			...the open market price for Development is 3% pa, so a 25% allocation implies an apportioned cost of 0.75%. This in turn indicates that the 75% to investment property, by this measure, is 0.25% pa. Your analysis
		
Click to expand...

_
This is baloney.  The Prospectus clearly states that the investors funds will be used to pay for development costs *in addition * to the 1% fee paid to the managers.

This whole 25% Development thing is really being exploited to suggest some USP in the product.  

For example, we are told that promoters of non-Development schemes estimate returns of 12% to 16% and Brendan should have better potential than them because it has 25% Development.  Notice the very clever ruse here.  Double digit returns are slipped into the Brochure as other people's estimates.  By suggesting that this scheme will most likely do even better than these inferior versions, the investor is immediately left with an impression of at least high teens growth being pretty much on the cards.


----------



## Bedlam

Did anybody notice on the LLS when asked about the other Directcors by Pat Kenny, EH made reference to a Pat Owens. There is nobody by this name mentioned in the prospectus.


----------



## IHateTolkien

> This is a competitive industry and based on a lot of the comments here it is clear that Hobbs intervention is hurting.


 
Or maybe some of the informed posters on Askaboutmoney simply don't think it's as wonderful as Hobbs would have people believe.  Someone's clearly having a hard time answering the critics.   



> Proper internal analysis already circulating from fund managers indicates that Hobbs model is well designed.


 
Such "hearsay" statements from an anonymous poster add little to this thread in my opinion, unless they can be backed up. I choose to be anonymous also but I will not try to post anything along the lines of "I hear from well-placed sources that Brendan Investments are X, Y or Z." I will stick to facts. 



> ...this has a MINIMUM annual charge of 1.45%...


 
Actually the minimum on the Hibernian product is 1.4%. So that's 1.4% of invested funds as against Brendan's 4% of invested funds. As was posted already, if an investor puts in €100,000, Brendan gears it up to €400,000 and then takes €4,000 in charges, that's 4% of the amount invested. 

Mantus and previous incarnations have made the questionable argument that investing in development somehow justifies extra charges. Even if we accept that argument, development only represents 25% of the fund. So how is such a high charge justified on the remaining 75% of the fund?


----------



## Duke of Marmalade

> This fund only needs to return an overall growth rate of 2% from the total fund before the principles reward themselves



If MichaelDes sees it like this how the heck is a poor "SMTM - must give up the  fags" punter going to possibly understand the true nature of gearing.

I have explained it before but let's try again.  The underlying investments have to perform at about 7% p.a. just to pay the interest and the geared up management charges. They will have to perform by about 7.5% for the bonus to kick in.

We can't argue both ways - that 8% IRR can be got by sleepwalking and yet this a bad investment.


----------



## gonk

Harchibald said:


> The underlying investments have to perform at about 7% p.a. just to pay the interest and the geared up managament charges. They will have to perform by about 9% for the bonus to kick in.
> 
> We can't argue both ways - that 8% IRR can be got by sleepwalking and yet this a bad investment.


 
As I mention above, there is plenty of German commercial property yielding around 9% on the market. So if you loaded up on it, a gross 8% IRR would be achievable without even getting any capital growth in the property values. Of course taxes and other expenses would reduce this, but the point is it would take minimal capital growth - at or less than inflation - to bring the nett IRR over 8%.

Brendan Investments may in fact turn out to be a good investment. But there's no way performance fees of this level can be justified - the promoters are being greedy and helping themselves to too big a slice of the cake.


----------



## IHateTolkien

> Hobbs yesterday on radio challenged the institutions to come up with a cheaper model involving Development and Investment.


 
Friends First / F&C's Corinthian: - 


100% allocation for execution-only transactions.
66% gearing.
Purchase and development of Superquinn sites
5 year term so shorter lock-in period required than Brendan Investments.
Total annual management charge of 1.65% of Net Asset Value - Brendan's NAV is 4%.
Performance bonus of 15% doesn't kick in until the investors have achieved 10% per annum - a full 2% more to the investors than Brendan's 8% threshold for bonus.
Challenge met.  Which radio station was Hobbs on?  I'll give them a call.


----------



## Guest111

Is anyone going to attend the presentation by Hobbs? I believe it's this Thursday in Citywest...there are others around the country


----------



## ClubMan

IHateTolkien said:


> Friends First / F&C's Corinthian: -
> 
> 100% allocation for execution-only transactions.
> 66% gearing.
> Purchase and development of Superquinn sites
> 5 year term so shorter lock-in period required than Brendan Investments.
> Total annual management charge of 1.65% of Net Asset Value - Brendan's NAV is 4%.
> Performance bonus of 15% doesn't kick in until the investors have achieved 10% per annum - a full 2% more to the investors than Brendan's 8% threshold for bonus.
> Challenge met.  Which radio station was Hobbs on?  I'll give them a call.


What's the minimum investment on the scheme above?


----------



## Bedlam

Friends First website minimum premium is €15,000


----------



## McVittie

answer posted above


----------



## Mantus

This exchange is useful in getting at the facts but please let us deal with the facts.  


It has been stated that the development costs are external to teh 1% pa charge and it has been stated that this is in the prospectus.  Please identify where this is stated because I cannot find it.  if this is a genuine error well enough, if it is incorrect and deliberately so, it is another example of mis-information on this thread.
It has been stated as a fact that the hibernian life European Residential fund has an annual fund management charge that is not on the gross fund value.  This is, once again, incorrect.  The lengthy PDF from Hibernian Life fully supports my earlier analysis.  It is specifically stated taht teh fund management charge is on the gross fund which includes leveraging at minimum levels of 1.45% pa to 1.55% pa and that broker commission, which are material to this discussion, are on top, and can add another 1% pa.
It is interesting to see that the Augusta fund is no longer being used for comparision purposes.  It fails to deliver the result that some posters on this thread are glued to for reasons best known to themselves.
The Corinthian fund is a false comparison as it is merely a wrapper unit linked package, i.e. accounting mechanism around one asset, i.e. one deal that has been bought from Superquinn and offloaded on policy holders as the Irish market peaks.  The stategy of the Corinthian fund and its timing is poor, to put it mildly.  To recommend Irish investors to invest 100% in Irish commercial and development property right now looks like extreme risk.  It would be better if the Corinithian fund took in the cash and sought to enter the market after the current transition period is complete when prices would not be at such extreme levels and rental yields would not be as compressed.  Why on earth do you thihk this deal is being mass distributred through the retail insurance market and not sold to a large investor?   The answer is as plain as the nose on your face - a well informed large investor wouldn't touch it.  This is a sorry comparison.
Please respond to the above facts.


----------



## Duke of Marmalade

> It has been stated that the development costs are external to teh 1% pa charge and it has been stated that this is in the prospectus. Please identify where this is stated because I cannot find it. if this is a genuine error well enough, if it is incorrect and deliberately so, it is another example of mis-information on this thread.



_Mantus_,  Part 5, Section 2, Page 20

This sets out 7 bullets on where the money will be spent

1.  Acquisition of properties
2.  Development of real estate
3.  Interest and admin costs
4.  Development management expenses *PLUS *a fee to the management company of 1% of the assessed value of any Development
5.  Payment of the management fees of 1% on investment properties
6.  Costs of external advisors
7.  Costs of the offer itself, estimated as a one off of 750K 

Correct if my interpretation of (4) above is wrong, in which case it is a genuine error.  I can assure AAM that the alternative motivations suggested by Mantus do not apply.

I don't really know whether the above are standard for the genre or not.  Other commentators seem more aghast at the performance bonus.

What I do know is that all the above taken together would amount in life insurance regulatory parlance to a RIY of at least 4% due to the AMC alone but possibly 6% in total - and that is enormous! - are these geared property structures really that sexy to justify such large expense leakage?


----------



## MichaelDes

Harchibald said:


> If MichaelDes sees it like this how the heck is a poor "SMTM - must give up the fags" punter going to possibly understand the true nature of gearing.
> 
> I have explained it before but let's try again. The underlying investments have to perform at about 7% p.a. just to pay the interest and the geared up management charges. They will have to perform by about 7.5% for the bonus to kick in.
> 
> We can't argue both ways - that 8% IRR can be got by sleepwalking and yet this a bad investment.


 

The math’s is near right - it’s an overall 2.5% return excl. costs or personal leverage - when compounded. What is the SMTM Acronym - I guess "show me the money". But............however bogged down people are about the math of the product and how it’s portrayed as a deception or not, what do people think of the critical mass i.e. property area's to invest - Germany, Portugal, UK and Ireland. 

I have expressed my views in a lengthy enough rant but would be interested in other people’s opinion? This is where the product will have to deliver after all. By the way - I'm just an investor across many aspects and not aligned with anything to do with this or within financial industry. By the way, last bit of your thread - 100% return on monies for me in 10 years would be considered poor performance.


----------



## IHateTolkien

Mantus, 



> It has been stated as a fact that the hibernian life European Residential fund has an annual fund management charge that is not on the gross fund value. This is, once again, incorrect. The lengthy PDF from Hibernian Life fully supports my earlier analysis. It is specifically stated taht teh fund management charge is on the gross fund which includes leveraging at minimum levels of 1.45% pa to 1.55% pa and that broker commission, which are material to this discussion, are on top, and can add another 1% pa.


 
My apologies.  You were referring to the Hibernian _Residential_ fund and I to the Hibernian _European Commercial _fund.  My mistake for not spotting this earlier.  

The Hibernian European Commercial Property fund has an annual management charge that starts at 1.4% depending on the product.  Broker commission can be added to this but a broker should only add trailer commission if ongoing service is being provided, so the correct comparison is the annual management charge excluding ongoing broker commission.    

In relation to Point 4 of your last post, the challenge was "...to come up with a cheaper model involving Development and Investment..."  I have demonstrated that the FF/F&C Corinthian fund achieves this, but rather than admit defeat, you choose to shift the goalposts by criticising the investment strategy.  Maybe Brendan's choice of investments will prove better over the next 10 years; maybe F&C's will - that's not the point.  As challenged, the FF / F&C model is cheaper.  Challenge met.


----------



## IHateTolkien

Declaration of possible conflict of interest.  I am a life, pensions and mortgage broker.  Lump sum investments form a part of my business but less than 10% of turnover so I have no fear of Brendan Investments from a personal standpoint.  Even if Brendan Investments achieve their highest target of €250M invested, it will have no effect on my business, which largely revolves around providing services to an existing client-bank.


----------



## gonk

Mantus said:


> It is interesting to see that the Augusta fund is no longer being used for comparision purposes. It fails to deliver the result that some posters on this thread are glued to for reasons best known to themselves.


 
The fact I'm not repeating the points I already made several times about the comparison between Augusta and Brendan doesn't mean I don't stand over them.

I'm not a cheerleader for Augusta and I don't recommend anyone invests with them without doing their own research - I just used them as an example I am familiar with.

At least with the Augusta fund, because the project specifics are detailed in advance they are able to provide full figures for the acquisition and set up costs you describe. The Brendan fund will incur similar costs in addition to the 1% p.a. management fee as Harchibald has pointed out in the excerpt from the prospectus - but at this point they are not quantified so no prospective investor can know what they will end up as.

I would, however, defy you to identify any other Irish geared property fund apart from the Brendan fund which is open to the general public and that has a final success fee as high as 20% and levies it on a final performance figure as low as 8% p.a.

For the record, I have no connection with the financial services industry and have no conflict of interest. It makes no difference to me if anyone invests with Brendan, Augusta or any other fund.


----------



## Mantus

The IIR IS 8 pa net of all costs of course as is the nature of IIR including bank debt repayment over the period. The IIR is therefore based on the cash down from investors ie equity.

The annual charges from Hibernians Residential fund range 1.45 to 2.55 depending on who sells it to you. Commission of 3 to 4 percent is also paid.

The Augusta fund charges 3 million in upfront fees on equity of 20. By this measure 250m would be charged 37.5 million upfront. This loss is huge to investors in this arrangement.

The Brendan offer aligns the interest of the investors with the mgt. The bonus pays zero at IIR of 8 as you know. The alignment of interests is a crucial point. If the equity grows at 10.IIR the investors get 9.6 and the mgt 0.4. If it grows 20.0 the investors get 17.6 and the mgt 2.4. The mgt focus consequently is to get the biggest possible profits from robust management of all projects - unlike other schemes that take out huge sums in upfront costs ie Augusta or in so called success fees for turning over assets.

The annual 1.0 covers all property mgt costs but not third party costs like construction, naturally. The biggest cost will be sourcing and assessing development projects. Developers spend much of their expertise in multiple project examination before settling on one.

Thanks for the continued exchange on the facts.


----------



## JohnBoy

MichaelDes said:


> The math’s is near right - it’s an overall 2.5% return excl. costs or personal leverage - when compounded. What is the SMTM Acronym - I guess "show me the money". But............however bogged down people are about the math of the product and how it’s portrayed as a deception or not, what do people think of the critical mass i.e. property area's to invest - Germany, Portugal, UK and Ireland.
> 
> I think that a debate about the merits (or demerits) of launching a geared property fund at this stake in the global economic and credit cycles would untimately be fairly futile. Think about this product from another perspective, if you wanted to raise cash from (dare I say it unsophisticated) retail investors, what asset class would appear to be the most attractive to them at the moment? The answer undoubtedly is still property and will remain the case for another 12 months or so I suspect.


----------



## Sunny

MichaelDes said:


> But............however bogged down people are about the math of the product and how it’s portrayed as a deception or not, what do people think of the critical mass i.e. property area's to invest - Germany, Portugal, UK and Ireland.


 
I agree that this seems to be getting ignored amid all the debate about charges and performance fees. I personally think the performance fee is too big but the main reason I won't be investing in the product is that I don't think the timing is right for a leveraged property fund. 

I would have thought that a large part of the funds performance will depend on a) getting bank finance and b) at attractive rates. Now I am not sure if they have financing in place but I would imagine that if they don't that it won't be easy to obtain considering banks are hoarding money to build up their own balance sheets and if they do get it, at what terms? Interbank rates are extremely high and above the ECB base rate so what financing cost would be attached to funding a leveraged property fund?

I also don't share the rosy economic outlook for Germany and I wouldn't touch commercial property in the UK with a bargepole. Banks are laying people off left right and centre and retailers are beginning to announce profit warnings as the effects of the rate hikes are only beginning to hit consumer spending. They are expecting a tough Xmas. Portugal like Spain I feel has seen overdevelopment of residential holiday homes etc.

Everyone has to make their own mind up. I just hope ordinary investors have enough sense not to borrow and add leverage onto leverage which for me is the worst aspect of this fund.


----------



## MichaelDes

_I think that a debate about the merits (or demerits) of launching a geared property fund at this stake in the global economic and credit cycles would untimately be fairly futile....if you wanted to raise cash from retail investors.. answer undoubtedly is still property and will remain the case for another 12 months or so I suspect.[/quote]_

You are missing the point.....I believe the best means of achieving wealth is through property and have myself a few such commercial leveraged investments. I think that as explained in my earlier comments both *UK and Ireland for* *growth look like dogs*, Germany is exciting and apart for cars going round a race track once a year in Portugal - I don't know if this is enough to sustain - or does Portugal have sub prime problems same as South of France and Spain that have yet to malign further. Maybe I'm a bear on three of their choice markets but would like convincing otherwise?

Referring to previous correspondents, although I've mentioned about the IRR etc - I do not think the company are wrong to do so. Who is their right mind with as little as €5k could organise such a scheme for themselves? It is a capitalist system last time I checked, and if these people make money for investors then they deserve to be rewarded. Financial houses and banks through their equity products with high initial commissions and exorbitant fees have been screwing investors for years - with many of its products at best matching inflation over their investment term.


----------



## MichaelDes

_Sunny_

_I won't be investing in the product is that I don't think the timing is right for a leveraged property fund. _

You are on the money there. The *London Interbank Offered Rates *or* (LIBOR)* have gone through the roof and notwithstanding the banks pouring money into the markets, has not helped dampen things. Banks mistrust each other so what chance have investment funds looking to finance at this stage. The rate hit 6.8% the highest since the last crisis in 1998, other money markets must be in a similiar fix. Making money it seems is just going to get harder - the good old days of easy finance maybe at a close.​


----------



## Mantus

I agree about the outside leverage. This is suitable only for HNW investors. NIB will need to satisfy its responsibilities under the Consumer Protection Code from IFSRA so that the advice is suitable to the client. My guess is that NIB is targeting its upper end clientbase and using Brendan to get its brand out since the Danske takeover. It is also regulated by the Danish Central Bank afaik.

It's down to your subjective judgement. It will be 60% exposed to Germany so that is the kernal I think. The development projects are Portugal tourism and the UK. The prospectus does not limit the Directors and any other country can be entered is my reading.


----------



## IHateTolkien

> The annual charges from Hibernians Residential fund range 1.45 to 2.55 depending on who sells it to you. Commission of 3 to 4 percent is also paid.


 
Mantus I clarified already - I was talking about the Hibernian European _Commercial_ Property Fund.  On this product, the AMC is from 1.4% and this is 1.4% of the invested amount, as the fund isn't geared.  With gearing the AMC on the Brendan Investments product is 4% of the invested amount per year.  

If you buy this product from a discount broker on an execution-only basis, you'll get the 3 or 4% commission reduced or waived.  There's plenty of discount brokers mentioned on this very website.  As Brendan Investments only sell on an execution-only basis (i.e. no advice) it's only proper that you should compare charges with alternative products also on an execution-only basis.


----------



## Duke of Marmalade

Mantus said:


> I agree about the outside leverage. This is suitable only for HNW investors.


 
I don't get that - why coz they can afford to lose? i agree with most contributors that this outside borrowing is totally unsuitable for anyone.

However, and I guess this is where EH is coming from, if the motivation here is to bring to the masses what is normally only availble to the wealthy, then it is consistent with the theme to enable borrowing to the same constituency.  In short the borrowing is targetted at the lower end not at the HNW.


----------



## gonk

Lord spare us, I don't know where to start . . . but I'll give it a go anyway



Mantus said:


> The Augusta fund charges 3 million in upfront fees on equity of 20. By this measure 250m would be charged 37.5 million upfront. This loss is huge to investors in this arrangement.


 
On page 18 of the Augusta brochure ([broken link removed]) the following up front charges are listed as percentages of investors' equity:

Fundraising costs: 3.0% 
Stamp duty 3.5%
Broker fees 3.0%
Legal, notary and survey fees: 1.4%
Professional setup fees and marketing costs: 0.75%
*Total 11.65%*

Augusta are aiming to raise €20m, so this would amount to €2.33m in initial costs - not €3m as you suggest. I also don't know where you come up with the figure of €250m; Brendan's prospectus states they intend to raise €50m and gear this up 3:1 to €200m, so up-front charges of the same proportion in the Brendan fund would amount to €5.825m - not €37.5m.

As Harchibald has noted above, in their prospectus Brendan themselves disclose the following similar categories of charges and costs which their fund will be subject to, in addition to their annual management fee and final performance fee:

1. Acquisition of properties
2. Development of real estate
3. Interest and admin costs
4. Development management expenses 
5. Costs of external advisors
6. Costs of the offer itself, estimated as a one off of €750k

But because Brendan have no specific plans publicly disclosed at present, they are unable to quantify any of the above charges except the last - investors must buy a pig in a poke. Suffice it to say I see no reason to believe Brendan will be able to bring these costs in at a significantly lower proportion of equity than Augusta - I take it they haven't a sweetheart deal with Brian Cowen or Angela Merkel on stamp duty, for example.

The last item is interesting - Brendan have made a big deal of the fact they have no entry fee. But in fact, the charges for the costs of the offer (i.e., advertising, roadshows, etc.) are estimated at 1.5% of investors' equity of €50m - an up front charge of similar scale to entry charges on other geared property funds, except in this case the investors get no advice tailored to their specific financial circumstances in return.



Mantus said:


> The Brendan offer aligns the interest of the investors with the mgt.


 
Lots of funds have final perfomance fees and they are always explained in these terms. To be frank, I have no problem with management being properly rewarded for their efforts. But - and I'm really sounding like a broken record now - there is no other fund I know of which has its performance fee at such a high percentage rate (20%), nor which levies it on returns over such a low threshold (8%). Can you identify one? Also, if you look at the prospectus, you will see the final performance fee is paid to the owners of "Founder Shares" and is due by virtue of the fact of ownership - not for any specific work undertaken. On the face of it, it would appear any of the founders could withdraw from the company tomorrow (or, God forbid die) and the performance fee would still be payable to the owners of these shares.

Bottom line - Brendan are heavily promoting their product as having low fees and charges compared to other geared property funds. I am of the view that the opposite is the case and nothing in this discussion so far has given me reason to alter my view.


----------



## Ticasht

What I don't understand is how my money can quadruple if only €1 in every €10 that I invest can give me a return on investment! Am I correct in assuming that the other €9 is stagnant as  Loan Notes? If I invest €20K then I get 2k shares = €2000 x 4 = €8k +€18k = €26k return?


----------



## RainyDay

I attended the NIB roadshow in Dublin this evening - updates as follows;

- EH clearly stated that they intend to raise up to €250m and gear up to €1 billion
- 75% of the total fund will go into commercial property purchases and 25% into development projects
- EH made a big play on the open, regulated nature of the fund, given their listing on the ISE and compliance with some EU Prospectus directive.
- The directors seem to have a track record in similar projects, though the case study projects they present were all 'work in progress' rather than completed projects.
- They cannot predict returns, but they noted that similar funds return 12%-14% on the property projects and they mentioned a target (though they possibly didn't use that word) of 37% return on development projects.
- EH mentioned negative media coverage of fees, and countered that many competing funds have 'hidden fees' (e.g. bank arrangement fees) which go directly to the directors without ever hitting the fund.


----------



## Duke of Marmalade

Ticasht said:


> What I don't understand is how my money can quadruple if only €1 in every €10 that I invest can give me a return on investment! Am I correct in assuming that the other €9 is stagnant as  Loan Notes? If I invest €20K then I get 2k shares = €2000 x 4 = €8k +€18k = €26k return?



You can ignore all this loan note stuff. It is not a scam. Just allows the scheme more flexbility.


----------



## Duke of Marmalade

RainyDay said:


> I attended the NIB roadshow in Dublin this evening - updates as follows;
> 
> - EH clearly stated that they intend to raise up to €250m and gear up to €1 billion
> - 75% of the total fund will go into commercial property purchases and 25% into development projects
> - EH made a big play on the open, regulated nature of the fund, given their listing on the ISE and compliance with some EU Prospectus directive.
> - The directors seem to have a track record in similar projects, though the case study projects they present were all 'work in progress' rather than completed projects.
> - They cannot predict returns, but they noted that similar funds return 12%-14% on the property projects and they mentioned a target (though they possibly didn't use that word) of 37% return on development projects.
> - EH mentioned negative media coverage of fees, and countered that many competing funds have 'hidden fees' (e.g. bank arrangement fees) which go directly to the directors without ever hitting the fund.



Good feedback Rainy.  THe prospectus clearly states 250M max, doesn't matter though.  The regulation point is bunkam, where is Eddie's beloved RIY?  Suggestions of returns exceeding 14% and up to 37% are totally unacceptable.


----------



## gonk

RainyDay said:


> I attended the NIB roadshow in Dublin this evening - updates as follows;
> 
> - EH clearly stated that they intend to raise up to €250m and gear up to €1 billion


 
They must be getting a good initial response, because that's five times what the brochure says they plan to raise. Guess Eddie figures this is the 31st way to spend your SSIA.


----------



## Ticasht

Hi HArchibald. I'm not suggesting for a minute that it's a scam. I am wondering if my % return would be on my total investment or just on the actual shares? Thanks for your help.


----------



## Duke of Marmalade

Ticasht said:


> Hi HArchibald. I'm not suggesting for a minute that it's a scam. I am wondering if my % return would be on my total investment or just on the actual shares? Thanks for your help.


Total investment


----------



## Ticasht

Thanks for clearing that up. Well on balance, they are being up front with their generous slice of the action. Reputations are sound so happy to invest.


----------



## IHateTolkien

> - EH made a big play on the open, regulated nature of the fund, given their listing on the ISE and compliance with some EU Prospectus directive.


 
This is one area of the promotion of this product that I find deplorable. The *prospectus* has been approved by the Financial Regulator; the *product itself* is not regulated by the Financial Regulator. How many Evening Herald readers or Late Late Show viewers will have spotted that subtlety?


----------



## ClubMan

RainyDay said:


> - They cannot predict returns, but they noted that similar funds return 12%-14% on the property projects and they mentioned a target (though they possibly didn't use that word) of 37% return on development projects.


Past performance etc.


> - EH mentioned negative media coverage of fees, and countered that many competing funds have 'hidden fees' (e.g. bank arrangement fees) which go directly to the directors without ever hitting the fund.


I don't get it - is _EH _actually implying "everybody else is doing it so why don't we?"!?


----------



## Sunny

If Eddie Hobbs is saying that other funds return 12-14% on property projects and up to 37% on development projects, does this not make their 8% performance hurdle sound way too low?


----------



## IHateTolkien

I see there's a thread on this product over on [broken link removed].  

Mollox makes the good point that the high costs involved in sourcing and/or developing property for the fund will be incurred during the early years of the fund.  But the 4% annual charge continues for the full duration.


----------



## gonk

Sunny said:


> If Eddie Hobbs is saying that other funds return 12-14% on property projects and up to 37% on development projects, does this not make their 8% performance hurdle sound way too low?


 
In short, yes. I've been banging this drum for a week, but 8% p.a. would be a poor return on a geared property fund and to my mind a "performance" fee on returns above this low threshold completely unwarranted. The rate at which it is applied - 20% of gains over 8% - is also the highest I've ever seen.


----------



## Duke of Marmalade

Call to any mathematicians out there for help.

Page 13 of the brochure describes the working of the Performance Bonus.

If a cash investment of 100K is involved the "strike price" (to trigger the PB) is 215,892.  I get that - it is 8% compound over 10 years.

If the cash investment is 100K and borrowings are 100K the strike price is 270,535. 

What is that all about?  What borrowings - internal?  external?  And for the Math where on earth does 270,535 come from?


----------



## gonk

Harchibald said:


> What is that all about? What borrowings - internal? external? And for the Math where on earth does 270,535 come from?


 
I'm only moderately stupid, but it beats the hell out of me too. There must be information missing - the table makes no sense on the basis of the facts stated.


----------



## Mantus

Perception becomes reality in the absence of facts. There has been much comment on the thread that is inaccurate.
1. The comments about uncompetitive costs fail to stand the test of scrutinising the non-prominent costs of other syndicates, most of the costs of which are higher even though no Development projects are contained. Augusta, used earlier, by Gonk and others deducts about €3m of the €20m raised in rebated property selling agent commissions, in establishment fees and in marketing commissions. The cost of retail life products where the only charges on display are those directly relating to the administration , investment services and distribution of life policies are, in most cases higher. These wrappers also don’t give investors access to the substantial costs behind them in property investment. Life funds are opaque. Surface costs relate only to life office admin, management services and sales commission. A substantial level of undisclosed costs operate below these levels especially in property including selling commissions etc. The comments about the performance bonus in the vacuum of adequate analysis indicates lack of reading, understanding and research and are invalid as a consequence.
In addition these vehicles are compelled to pay the Revenue 23% of gains on their properties on the 8th anniversary. In the absence of liquidity this means borrowing by the fund. In design terms it means that syndicates will restrict terms to less than 8 years, a term which many believe is too short to weather cyclical downturns.
The Brendan model as a Plc avoids this tax charge and its cost model best aligns shareholder and director interests. There is no deduction from shareholders to pay commission. There is no % of equity raised being deducted to pay directors. There is direct cost recovery capped at a flat 750k clearly explained. The incentive at 10% IRR earns the investors 9.6% and founding director 0.4%, but at 20% IRR the former earns 17.6% which doubles their money every four years and the latter earn 2.4% pa. Evidently the motivation of the Directors will be to grow the assets as strongly as possible. Both the CEO Vincent Regan and Director Hugh O’Neill will be full time, and not part time consultants which is the feature of other syndicates. The Chair Dermot Flanagan SC and Pat Owens are independent of the incentive.
2. Speculative comments presented as fact have been made. The CEO Vincent Regan is an ex-Revenue auditor and Tax Partner at Deloitte where he dealt with developers. He is a full time developer for several years directly involved and invested in €600m Gross Development Value. Pat Owens is an Architect by profession and is directly involved in projects with a GDV of €1,000m. Hugh O’Neill ex-Deloitte is a Chartered Accountant involved in €40m of investment property mostly in Germany where he is to reside full time. Hobbs is already well known and is a Director of the National Consumer Agency and his firm is an Authorised Advisor under the Investment Intermediary Act. Flanagan is a Senior Counsel with an impeccable record in infrastructure, public and private properties including Adamstown, the M50 and Spencer Dock
3. The comments about IRR% made earlier are mathematically inaccurate. IRR% is the return to investors on their equity after all costs excluding their CGT liability except for Pension Scheme shareholders who are tax exempt.


----------



## Cameo

This offering reminds me of shell companies that were launched around 1999 to offer small investors opportunity to get involved in tech type companies.

A board of high profile people got together and money was raised to pursue exciting opportunities....


----------



## Mantus

Sorry one additional fact. The facility is 25K (min) requiring Net Investment assets of 250k and earnings of 8k plus pa. Loans from NIB 50k to 100k requires NIA of 500k and earnings of 100k plus. The process is of course regulated by IFSRA under the CPC. The speculation here has been made in the absence of these facts which show that the NIB borrowing is clearly targetted at those with strong balance sheets. Existing debt servicing will form part of the due diligence. 

NIA excludes home etc and loans cannot exceed 10% max of it.


----------



## Sunny

Mantus said:


> Sorry one additional fact. The facility is 25K (min) requiring Net Investment assets of 250k and earnings of 8k plus pa. Loans from NIB 50k to 100k requires NIA of 500k and earnings of 100k plus. The process is of course regulated by IFSRA under the CPC. The speculation here has been made in the absence of these facts which show that the NIB borrowing is clearly targetted at those with strong balance sheets. Existing debt servicing will form part of the due diligence.
> 
> NIA excludes home etc and loans cannot exceed 10% max of it.


 
To be fair the loan facility was presented as open to all with no defining criteria hence the speculation. It certainly sounds better than was originally presented by the company but is that in response to criticism or was it always intended to be like that because I don't remember EH ever saying the facility was only availble to HNW individuals when the deal was first mentioned. 

Glad to hear that it though


----------



## DrMoriarty

IHateTolkien said:


> I see there's a thread on this product over on [broken link removed].


  Seems to have disappeared?


----------



## IHateTolkien

DrMoriarty said:


> Seems to have disappeared?


 
I wonder why.   should bring you to Google's cached copy.


----------



## IHateTolkien

Nice to see Mantus answering some of the critics - this is useful information. 

Some big questions remain unanswered: - 

(1) Is there a comparable product out there with such a low threshold point (8% per year) at which the promoters start awarding themselves bonuses? 

(2) If Brendan Investments are so committed to "transparency and openness" (their words) why do they not make it clear on their website and other promotional efforts that the product is not regulated by the Financial Regulator nor eligible for the Investor Compensation Scheme? Only the prospectus has been approved by the Financial Regulator. 

(3) The informed posters on this thread have acknowledged from the start that the promoters have experience of commercial property investment. But if the public are being asked to trust that these gentlemen will earn a good return, is there any information available about how successful their previous ventures have been? It's one thing to have been involved with the business; have they achieved good returns for investors in it?


----------



## Duke of Marmalade

Mantus has clarified certain aspects and I am prepared to accept that it is at least on a par with similar schemes, not being an expert myself.  I also withdraw my assumption that the external borrowings were targetted at the great unwashed.

Nonetheless, given EH's enormous credibility as a consumer champion I remiain strongly of the view that he has availed of the regulatory gap to aim way below his own espoused standards in transparency, specifically:

Gearing is exemplified as +20% = +80%, -20% = -80%, whereas I have shown that it should be presented as +100% Gearing Neutral,  +125% Gearing kicker= 75% less 15% Performance Bonus i.e. 60%; +75% Gearing drag = -75% wiping out the growth on the ungeared vehicle.

References in the brochure to 12% - 16% on other schemes which are claimed to be inferior is irresponsible.

This is reinforced by statements in the Evening Herald that quadruple your money is on.

And Rainyday has confirmed that the roadshow is reaffirming these outlandish claims.

I stand by my asertion that expenses represent a Reduction in Yield of 6%, about 4 time life assurance norms and given EH's love affair with RIY I would have expected him to volunteer the information.  I will accept Mantus assertion that an equivalent disclosure on other similar schemes would be even worse - but is that a justification?


----------



## gonk

Mantus said:


> Perception becomes reality in the absence of facts. There has been much comment on the thread that is inaccurate..


 
Indeed. Such as:



Mantus said:


> The comments about uncompetitive costs fail to stand the test of scrutinising the non-prominent costs of other syndicates, most of the costs of which are higher even though no Development projects are contained.Augusta, used earlier, by Gonk and others deducts about €3m of the €20m raised in rebated property selling agent commissions, in establishment fees and in marketing commissions.


 
As I have already pointed out, total up front costs for the 6th Augusta fund are €2.33m out of €20m equity. Where are you getting €3m from?

Also as stated above, apart from commissions, that €2.33m includes costs such as stamp duty, legal fees, surveyors fees and other professional advisors. Stamp duty alone accounts for €700k or 30% of the total. It is disingenuous in the extreme of you to imply that Brendan will not incur similar costs. Will Brendan not pay stamp duty on its property purchases? Will it not employ lawyers?

You are speculating when you say Brendan's costs will be lower - the information to support such a conclusion is nowhere to be found in the prospectus. One could just as easily argue that the Augusta fund is likely to have lower total costs for investors given its lower annual management fee and final bonus structure.

As for the constant reference to development projects, whilst I will accept that that these have the potential to deliver higher returns, the flip-side of that is that they carry a higher risk, compared to say, buying an office block with a sitting blue chip tenant. The development component can certainly be characterised as a positive feature, but it is not an unalloyed benefit to investors.



Mantus said:


> In addition these vehicles are compelled to pay the Revenue 23% of gains on their properties on the 8th anniversary. In the absence of liquidity this means borrowing by the fund. In design terms it means that syndicates will restrict terms to less than 8 years, a term which many believe is too short to weather cyclical downturns.
> The Brendan model as a Plc avoids this tax charge . . .


 
But gains in the Brendan fund _are _subject to CGT, currently at 20% - it's not as though they're tax free. And there is no such thing as a free lunch - the 20% rate arises from the fact that the Brendan fund is unregulated and investors will not have recourse to IFSRA and the Financial Services Ombudsman if they have an issue with their investment. (Incidentally, the Augusta fund is structured so gains are taxed at the lower 20% rate too. The same issue with regulation applies to it.)



Mantus said:


> its cost model best aligns shareholder and director interests.


 
I beg to differ. As I have stated _ad nauseam_ the bonus structure is heavily biased towards the directors. Once again (and other readers can draw their own conclusions from your failure to answer the question so far), what other geared property fund levies a performance fee as high as 20% on gains over a threshold as low as 8% p.a.?



Mantus said:


> There is direct cost recovery capped at a flat 750k clearly explained.


 
It is not "capped" at €750k - the prospectus clearly states this is an estimate. Presumably, now that the aim appears to be to raise five times as much in shareholders funds as the prospectus states, this figure will rise in proportion.


----------



## Duke of Marmalade

Mantus,

Here's a *fact *about taxation.

Brendan pays taxes internally at rates ranging from 12.5% on trading profits to 25% on rental income plus possibly foreign witholding taxes (which given the nature of the beast might be high).

(How do I know?  Appendix 2 of the Prospectus)

Punters pay 20% CGT on their profits, so in total punters pay taxes ranging from 30% to 40%.

Life products pay 23% precisely because they do not pay internal taxes except again possibly some foreign witholding taxes (ever hear of Gross Roll Up?) .

After 8 years a gross roll up fund will already be well ahead in liquidity terms compared to an internally taxed fund so even this point doesn't stack up.

Mantus I will give you the benefit of the doubt that you never reached Appendix 2 of the Prospectus for these *facts* are not at all apparent in the Brochure.  I do hope the promoters are not suggesting any tax advantages here, anybody any sightings of such misrepresentation?

As a passing comment the Prospectus is a highly professional document with no hyperbole or misleading representations.  Unfortunately it will be absolutely incomprehensible to the average SMTM punter.  The Brochure is meant to address that deficiency but as I have explained elsewhere this latter is a deply flawed document.


----------



## bramasole

Could somebody please summarize the advantages and disadvantages of this investment based on all the comment so far?  thanks v. much


----------



## ClubMan

bramasole said:


> Could somebody please summarize the advantages and disadvantages of this investment based on all the comment so far?  thanks v. much


I think that there is a key post summarising the pros and cons in the works so stay tuned.


----------



## bramasole

thanks, will do


----------



## MichaelDes

_


Harchibald said:



			I'll have a go before the official version is out.
		
Click to expand...

_Harchibald

Seems a realistic summary. As they said on Catch Me If You Can. "I Concur, Do You Concur"?


----------



## Mantus

This is fun. What should the fee charging structure be to manage the assets and produce profits using proper professional services? You are starting from the belief that all syndicated property schemes are a rip off so design a notional one, properly costed and report back. Your model must deliver acceptable quality of mgt to investors and make a profit to be credible. You decide the optimum vehicle to deliver transparency and you decide the markets, the marketing and the strategy of your notional vehicle. 


(BTW Gross roll up Irish funds are no longer so and must pay out 23% to the Revenue on the 8th anniversary. Gross roll up funds are fully liable to tax outside of Ireland and only exempt here. The 23% pay out is not an offset against tax paid in other countries even if there is a DTA).


----------



## simplyjoe

Harchibald and Mantus - Lads - excellent writing. Where are you on all the other great topics being discussed. We could do with your analysis on other subjects. Whats so special about this subject? Any vested interests to suddenly make you come alive?


----------



## IHateTolkien

> What should the fee charging structure be ...


 
How about raising the bar on the promoters' bonus from the very low 8% to at least 10% for starters?

I note that Mantus seems unwilling or unable to answer my three burning questions here.


----------



## kaplan

As an audience member this has been great fun and good value as I got to watch two plays at the same time.

On the one hand I watched a tribunal of inquiry between an excellent witness and aggressive questioners. The harangues were particularly enjoyable. I’m looking forward to the official summary. Great ending with the gauntlet thrown down by Mantus. I do hope there is a second act.  

The second performance was like an internet version of the valley of squinting windows with its bar stool craw thumpery and begrudgery. Although I felt it was a tad overacted it none the less shows that spirit of Garradrimna is being re-invigorated for the internet age. As a one act play it has run its course though.


----------



## bramasole

thanks for summary,
I attended the citywest roadshow this evening, there was about 40 people in the room.  excitement wasn't in the air I have to say.  few questions asked.


----------



## Mantus

Good to hear that there is no excitment. The previous night at Raddisson during the match and hosted by NIB there was 230 I'm told. No surprise that its website is very busy given the scale of publicity. To be accurate, the promoters cannot be accused of hype and risks are explained at length but the media reaction is a different matter and certainly can be criticised for inaccurate and misleading headlines and copy.

Was the presentation professional or razzle dazzle?


----------



## Sunny

Mantus said:


> Good to hear that there is no excitment. The previous night at Raddisson during the match and hosted by NIB there was 230 I'm told. No surprise that its website is very busy given the scale of publicity. To be accurate, the promoters cannot be accused of hype and risks are explained at length but the media reaction is a different matter and certainly can be criticised for inaccurate and misleading headlines and copy.
> 
> Was the presentation professional or razzle dazzle?


 
Mantus, do you have any links to NIB?? Not accusing you but you do mention them on another thread


----------



## Duke of Marmalade

Mantus said:


> This is fun. What should the fee charging structure be to manage the assets and produce profits using proper professional services? You are starting from the belief that all syndicated property schemes are a rip off so design a notional one, properly costed and report back. Your model must deliver acceptable quality of mgt to investors and make a profit to be credible. You decide the optimum vehicle to deliver transparency and you decide the markets, the marketing and the strategy of your notional vehicle.
> 
> 
> (BTW Gross roll up Irish funds are no longer so and must pay out 23% to the Revenue on the 8th anniversary. Gross roll up funds are fully liable to tax outside of Ireland and only exempt here. The 23% pay out is not an offset against tax paid in other countries even if there is a DTA).



Mantus, please, you know you got the tax thing wrong Please agree that the overall tax rate for investors in Brendan is between 30% and 40% PLUS any foreign witholding taxes, this latter being a disadvantage also shared by life funds.

On your first point, I think I have to agree.  These are *expensive*.  It would also be expensive to launch a project to explore for gold on the Moon.  What has happened here is that a few of these have paid off (on paper) because of the quite unique conditions of falling interest rates and soaring property values.  

People seem to think that geared property is a no brainer, borrow cheap money to the hilt from the banks  buy properties which can only go one way - truly money from America. So what, if property investment is expensive, what with stamp duty and a whole heap of professional costs, the gearing formula ensures that these costs will be swampled.  

Sorry,  that easy money for everybody - banks, managers, promoters, advisors, the taxman and punters - just isn't sustainable.  The party is over.  As always the fat cats got the cream and the poor unwashed are going to be left with sour milk.


----------



## gonk

Mantus said:


> To be accurate, the promoters cannot be accused of hype


 
To be accurate, they certainly can.

Firstly, for their repeated claims that their fees and charges are substantially lower than their competitors, when the most anyone can say is that in some areas they are lower (entry charges), in some areas they are higher (annual management fee and final bonus), and in other areas nobody knows (property acquisition costs, legal & professional advice, etc.) because the prospectus doesn't quantify these costs.

Secondly, for their claims as to the likely returns on investment. The brochure by implication claims that Brendan will do better than other funds which project returns of 12% to 16% p.a. - there is no specific information on any projects nor any assumptions underlying these expectations. 

Lastly, Eddie Hobbs allowed himself to be quoted in a front page article in the _Evening Herald _claiming in the opening sentence "he could quadruple investments for members of the public" and the article was then reproduced on the Brendan Investments website. (They have clearly thought better of this as it has since been removed following adverse comment in other papers.)

If all of the above doesn't amount to "hype" - not to mention the blanket media coverage obtained in the week or two after the product's launch as a result of Hobbs's involvement - I don't know what does.


----------



## Mantus

You are countering again with opinion. Harchibald has just written off the entire syndicate industry. This, is evidently his belief therefore he can never reasonably evaluate on behalf of readers looking for balanced assessment. Gonk, evidently, simply dislikes the opposition at a time Augusta with its very high upfront charges, is launching.

Criticism in the absence of suggesting an optimum model is a bit vacuous ce ne pas? The challenge remains unanswered.


----------



## IHateTolkien

Speaking of unanswered challenges, I see Mantus seems unwilling or unable to answer any of the three burning questions about this product here.  I'm sure AAM readers can draw their own conclusions from this.


----------



## Duke of Marmalade

Mantus, vous avez raison, I am tres tres skeptical. 

How can it be possibly sustainable that you raise a few bob multiply that by 4 by borrowing spend a small fortune on lawyers, accountants, fund managers, property specialists, buy a few commerical properties and lash out 9% stamp duty and hey presto earn 14% to 37% per annum. It has happened, and mostly on paper, for a very brief period of unique  investment conditions.

The party is bound to end sometime, just as all this CDO nonsense is becoming unstuck.  They are not unrelated - what will be the cost of the 75% borrowing?  Is it going to be available at all over the full 10 years.  Certainly very unlikely to be cheap.  The days of cheap and easy money were brief but they are now surely gone.


----------



## gonk

Mantus said:


> You are countering again with opinion.


 
All of the points I have raised above are facts. Feel free to point out any errors of fact. I agree my final conclusion that the totality of the points raised amounts to "hype" on Brendan Investments' part is my opinion. 



Mantus said:


> Gonk, evidently, simply dislikes the opposition at a time Augusta with its very high upfront charges, is launching.


 
Brendan Investments is not my "opposition". As I have already stated (and has Mantus has refused to answer, despite being asked several times) I am not involved in the financial services industry. My only connection to Augusta is that I have invested in a previous fund of theirs. As I said, I merely used them as an example I am familiar with. It makes no difference to me if anyone invests with Augusta - I will not benefit in any way.

Mantus, on the other hand, dislikes being called on misrepresentations and errors of fact in his posts. For example:


Why did you claim Augusta's up front costs are €3m when they are in fact 29% less at €2.33m?
Why do you not acknowledge the majority of those up front costs is in categories such as stamp duty, legal and professional fees which will be obviously be incurred by Brendan too - the only difference being Brendan have not disclosed what they expect to spend on them?


----------



## Mantus

I accept your bone fides in holding this view which is valid if a little pessimistic. The facts are that buying support from US European and Japanese financial institutions and pension funds is growing very strongly and research indicates that this will continue for many years to come. The Brendan Prospectus attaches CB Richard Ellis analysis validating this view.

To Ihatetolkien, no problems. 1. There isn't another Development and Invt Property syndicate for like for like comparison but plenty of 100% Invt property syndicates with huge upfront costs and sales commissions and higher annual charges run by part-time managers / consultants. Brendan's main directors are 100% full time and better aligned with the bonus structure to investor interests as previously explained. There are no commissions or % of inflow from investors.

2. The Prospectus is regulated not the PLC. It is not a product from a financial institution like a Life Office. It is bypassing these middlemen and is not a regulated product. Neither are schemes from Quinlan Private, Warren Private etc. It is not covered for catastrophic meltdown in European property and land values by the Investor Compensation Scheme, just like any direct property investment.

3. The performance and track record of its Directors is outlined at the public meetings where all questions not already outlined in the Prospectus are answered. 

Honestly, criticising this offer which is the most explained, transparent and most scrutinsed collective investment in Irish financial history on the basis of what it did not say in its 90 page Prospectus looks a little trivial.


----------



## IHateTolkien

Mantus,

Thanks for answering my queries. I may not agree with some of your views but I'm enjoying the exchange. 

1. Having a lower threshold point than others for payment of bonuses to the directors doesn't align the interests of the investors with the directors any better. It just pays them more. This argument might be valid if the annual fee was set so low that the only way the directors would get paid was via the bonus. But in this instance, the annual fee is high AND the bonus threshold is low.  If the fund performs badly, the directors still get paid from the annual management charge.    

2. We agree here. My point is that Brendan Investments claim on their Home Page to be committed to "transparency and openess". Surely it would be in keeping with such a claim to make it clear that the product is neither regulated by the Financial Regulator nor party to the Investor Compensation Scheme? My guess is that the smaller punters Brendan are targetting may only have previous experience of dealing with regulated products so a clear indication that this is not one would be transparent and open. 

Clients of Kevin Warren or Derek Quinlan will have solicitors and accountants explaing this to them before they commit. How many punters at the €5,000 level can afford to pay a solicitor and/or an accountant to explain the difference between a regulated product and an unregulated one? 

3. Okay. If the directors have a proven track record of achieving returns for investors, I'm curious as to why they seem to hide that light under a bushel, choosing only to reveal it at meetings.



> Honestly, criticising this offer which is the most explained, transparent and most scrutinsed collective investment in Irish financial history on the basis of what it did not say in its 90 page Prospectus looks a little trivial.


 
Ah but is it really the 90-page prospectus that will attract most punters into this? Of course not - it's the brochure, the website, the Hobbs PR drive, the media coverage etc.


----------



## bramasole

Mantus said:


> Good to hear that there is no excitment. The previous night at Raddisson during the match and hosted by NIB there was 230 I'm told. No surprise that its website is very busy given the scale of publicity. To be accurate, the promoters cannot be accused of hype and risks are explained at length but the media reaction is a different matter and certainly can be criticised for inaccurate and misleading headlines and copy.
> 
> Was the presentation professional or razzle dazzle?


 
It was the opposite of razzle dazzle.  Apart from EH, who is obviously used to public speaking, the others seemed just professional (although one speaker in particular was so nervous I felt sorry for him).  The only razzle dazzle I would say came from the NIB guy.


----------



## Mantus

So much for hype then, but back to the exchange on value / cost. Both Harchibald and Gonk reckon its too expensive so I repeat my challenge to get out of the terraces and come play;

 What should the fee charging structure be to manage the assets and produce profits using proper professional services? You are starting from the belief that all syndicated property schemes are a rip off so design a notional one, properly costed and report back. Your model must deliver acceptable quality of mgt to investors and make a profit to be credible. You decide the optimum vehicle to deliver transparency and you decide the markets, the marketing and the strategy of your notional vehicle.


----------



## Duplex

Mantus said:


> So much for hype then, but back to the exchange on value / cost. Both Harchibald and Gonk reckon its too expensive so I repeat my challenge to get out of the terraces and come play;
> 
> What should the fee charging structure be to manage the assets and produce profits using proper professional services? You are starting from the belief that all syndicated property schemes are a rip off so design a notional one, properly costed and report back. Your model must deliver acceptable quality of mgt to investors and make a profit to be credible. You decide the optimum vehicle to deliver transparency and you decide the markets, the marketing and the strategy of your notional vehicle.


 
Surely its the strength of the underlying assets which is the principle determinant of the success of a fund. With this in mind will the Brendan Fund be buying in London, or elsewhere in the UK in light of the rapid decline in the commercial market I wonder. 



> Commercial property in August failed to deliver a positive monthly total return for the first time since December 1992, data used for property derivatives trading showed on Friday.
> The data, based on Investment Property Databank's (IPD) benchmark UK All-Property index, also showed negative capital growth in all three of the country's main property sectors -- retail, industrial, and offices.


 
[broken link removed]


----------



## Duke of Marmalade

Mantus said:


> So much for hype then, but back to the exchange on value / cost. Both Harchibald and Gonk reckon its too expensive so I repeat my challenge to get out of the terraces and come play;
> 
> What should the fee charging structure be to manage the assets and produce profits using proper professional services? You are starting from the belief that all syndicated property schemes are a rip off so design a notional one, properly costed and report back. Your model must deliver acceptable quality of mgt to investors and make a profit to be credible. You decide the optimum vehicle to deliver transparency and you decide the markets, the marketing and the strategy of your notional vehicle.



Mantus, I can no more design a notional model of this kind that works than I could design that moon project.  The concept is unsustainable.  Maybe EH will do us all a favour.  His scheme will have such intense scrutiny that even after a couple of years the media will be baying for info - especially on that promised grey market.

These unprecedented conditions can't continue for ever and IMHO the signs are all there from other events in the credit markets, that the party is heading big time towards the hangover phase.  We will be seeing grey market prices of 50c in the euro and these preposterous money for ould rope schemes will go the way of that other nonsense Geared Trackers.  He probably will decline the Late Late Show follow up invite. 

Of course we are always going to have syndicates of profssionals in the building game who spot an opportunity and need bank financing.  

But this chain letter idea of give me a few bob,  I'll get the banks to quadruple that with loans and then off to the property tables to do a bit of speculating and sure how can you miss will surely come unstuck and very soon.


----------



## Mantus

Time will tell but the buying support for the Pan european commercial property market is unlikely to slow if economic conditions remain reasonable especially German GDP growth @2% to 3% range. Harchibald I genuinely respect your very bearish view which should see people buy gold if it is right, but I think its a far too pessimistic analysis of things today.

In the short term ie into 2008 Q1 and Q2 Brendan Plc may be getting its timing just right if there is a decline in prices in Ireland for development land. Moreover if your assessment of an iminent decline in UK prices is right Brendan may be afforded a good chance to pick up Investment Property at cheaper prices and less compressed rental yields which would be welcome given the relatively higher UK base rate at 5.75%. If the  tightening in banking spills into lower prices due to depressed demand over coming months cash will be king and Brendan plc will should have plenty of that.

Once again thanks for continuing this exchange.


----------



## Duke of Marmalade

Mantus, 

I am a simple bear, here's how I see the divy out if EH's promise to quadruple the punters' money comes to fruition.

Assuming punters put up 50M then 

Punters gain 150M
Banks get 200M in interest
Taxman gets from Brendan 75M
Promoters/Management get 65M
Other advisers/professionals get 20M

That's 510M on an outlay of 50M for very little real added economic value.

That cannot be sustained in a rational economic system.  I hope you agree and that we are only arguing about the timing of when rationality sets in.  You might think this will take some time, I think the signs are so apparent that the party is already over.

BTW do you agree with me on that tax point, that the taxation levels are between 30% and 40%?


----------



## MichaelDes

Mantus said:


> _If the tightening in banking spills into lower prices due to depressed demand over coming months cash will be king and Brendan plc will should have plenty of that._
> 
> Once again thanks for continuing this exchange.


 
Bear markets in property take much long to fix than equity markets..typically 4 years for any favourable return of sentiment. Just because it is lower does not mean it has bottomed.


----------



## Duke of Marmalade

I'm beginning to feel a bit of an outsider here, my experience being in conventional retail investment.  I was at first considerably swayed by Gonk's posting but to be fair Mantus did make a partial rebuttal.  Here's how I mark the card.

*1.  Charges  *

Charges are very high from my conventional perspective but I am persuaded that they are typical for the genre.  M 1  G 0

*2.  Term*

The term is again very long from a conventional perspective but M's 7 - 10 point is valid and again this is typical of the genre.  However, M blew this penalty kick by raising the 23% tax red herring.  M 0  G 0

*3.  Germany*

Oops! Own goal by G.  M 1 G 0

*4.  Specific projects*

I thought this was a very strong point made by G.  M would seem to agree if indeed G was  correct and there were no specific projects but argues that G has this wrong.   I read the prospectus and brochure again.  These very much point towards G's interpretation that the business plan is aspirational.  I am not sure that roadshow presentations redress the matter.  M 0 G 1.

*5.  Experience of the management team*

Hard to tell.  Throwing around a few big figures doesn't really mean much.  I think this will be the stumbling block for most HNW investors, who will be completely unimpressed by the EH factor and probably unconvinced of the strength in depth of the rest of the team.  However, I am going to mark this a draw.  M 0 G 0.

*6.  Consumer protection*

You won't be surprised to hear that I am 100% behind G on this one.  I won't repeat all my arguments, but given the EH factor, I am greatly disappointed that He did not volunteer the sort of transparent disclosures (e.g. RIY) that He has championed for decades but happen not to apply here because this is a new legal form.  M 0 G 1

*7.  Gearing squared*

Not suitable for any constituency.  M 0 G 1.

Overall score:  *Mantus 2 Gonk 3.*  Congratulations Gonk


----------



## Mantus

Thanks for the partial refereeing of Gonk's partial agenda, but the crux is a Gonk response to the position put to him. While you have responded saying you can't deal with it, he claims vast experience in syndicates and displays deep knowledge of Augusta, perhaps as a scheme designer himself. So here it is again Gonk;

What should the fee charging structure be to manage the assets and produce profits using proper professional services? You are starting from the belief that this property scheme is a rip off so design a notional one, properly costed and report back. Your model must deliver acceptable quality of mgt to investors and make a profit to be credible. You decide the optimum vehicle to deliver transparency and you decide the markets, the marketing and the strategy of your notional vehicle.


----------



## Duke of Marmalade

Mantus, I know I am a bit peripheral to this heavyweight contest. 

You are wont to demand answers to your questions. and I have attempted to do so, although I realise it is Gonk you are prodding.  

Will you indulge me and answer a question I put to you.

Do you agree that the overall effect of taxation (ignoring stamp duty) is between 30% and 40% plus any denied foreign witholding tax?


----------



## Mantus

Sorry, first I'm no tax expert to be frank with you, but as a PLC it will be no different to any other PLC in the taxes it pays on profits. Most of these will arise outside of the Irish tax jurisdiction and I presume DTA's between EU countries will prevent double taxation. I'm not up on the forensics of UK, German and Portuguese tax so I'm reluctant to hazard the aggregate rate the PLC will pay. The MD, Vincent Regan is a tax expert which will help, former Tax Partner at Deloitte and Revenue Auditor.

Obviously before shareholders pay CGT, the PLC itself will have paid taxes but using offsets like interest on borrowings etc as offsets.

Gross Roll Up funds must pay tax on overseas earnings as you know, and the profit to policyholders is 23%. In some cases such as deemed "Offshore Funds" like overseas foreign companies established to invest in property I think the charge can be at 41%. But, once again I'm not qualified to give a definitive answer to your question.


----------



## gonk

Mantus said:


> Gonk your sensitivity to Augustus syndicate is telling. Your cons are not supported by the facts.


 
I disagree.



Mantus said:


> 1 High charges. This is a false conclusion when measured against other schemes even those 100% iNVT as demonstrated. Augustus 2.3m upfront mostly commission rebates, 0.75% amc, Hibernian Life Res Fund 1.45% to 2.55% on Gross Fund etc.


 
Brendan's main charges are an annual 1% management charge and a final performance fee of 20% of gains over 8% p.a. The corresponding charges in the Augusta fund are 0.75% and 15% of gains over 12.5% p.a.

Augusta has a 3% entry charge and while Brendan claims to have none, the prospectus notes that an estimated €750k costs of the offer will be charged to investors, which would effectively be a 1.5% entry charge if the original target of €50m in shareholders funds is raised.



Mantus said:


> The Augusta fund charges 3 million in upfront fees on equity of 20.


 
On the subject of supporting your comments with facts I note you have effectively retracted your earlier exagerrated statement above of Augusta's upfront costs. While demanding answers of me, you have failed to respond to my point that only €600k of the €2.3m is the entry charge, and the balance comprises setup and property acquisition costs such as tax and legal costs, which Brendan will also incur, but has not quantified.

If Brendan meets its target of a 16% IRR its charges on a €5k investments will comprise:

Cost of offer: €75
Annual 1% management charge: €1,236.65
Final performance fee: €2,252.51
*Total: €3,564.15 (71.3%)*

This assumes for simplicity that the 16% p.a. compound growth is achieved evenly over the 10 year investment period.

The corresponding charges in the Augusta fund, if it ran for ten years (I know it is not going to, but to compare similar timeframes) and also achieved 16% p.a. would be:

Entry fee: €150
Annual 0.75% management charge: €927.48
Final performance fee: €873.09
*Total: €1,950.57 (39.0%)*

Please explain how Augusta's fees are dearer. And please stop harping on about up front costs you know Brendan will also incur.



Mantus said:


> 2. Its 7 to 10 which is actually better given the property cycle and it avoids the 23% tax payout on the 8th anniversary which is now compressing terms for syndicates.


 
If you're willing and able to lock up your money for 10 years, this may be an advantage. Lots of people (including me) would rather not.



Mantus said:


> 3. This is the funniest because Brendan is 60% investing in Germany which you like but have listed as a con.


 
I see no inconsistency between accepting that good German commercial property is a reasonable investment at present and concluding that the proposed geographical spread as a whole is not, because of the inclusion of the UK and in particular Ireland. Personally, I would not invest a cent in Irish property at present. The Irish banks agree with me - they have been busy doing sales and leasebacks on as many of their own premises as they can.



Mantus said:


> 4. Again an false statement as outlined in the roadshows and reported in the media, including a Formula 1. Project on 700 acres Algarve 5 Star Hotel, Dresden Hotel 20 yr lease 6.5% yield etc.


 
I'm only going on what's in the prospectus and brochure. If Brendan is able to provide oral presentations on these at the roadshows, why didn't it provide detailed written information in its much vaunted prospectus?



Mantus said:


> 5. The MD has 600m and another Director 1 billion GDV experience..


 
Once again, my point is they have no track record _as a team. _



Mantus said:


> 6. The Prospectus is regulated and there has been enormous scrutiny. Your "worry" is unconvincing given you support and invest in schemes with zero scrutiny and regulation.


 
The fact that the prospectus is regulated is being used to obfuscate the fact that as you well know the investment itself is not. My concern about its unregulated status is on the basis that the investment is being mass-marketed to small investors on the back of Eddie Hobbs's reputation. I took professional advice before making my investment. This product is being sold on an execution-only basis and the distinction between regulation of the prospectus and the investment will be lost on many.



Mantus said:


> 7. The gearing from NIB is clearly aimed at HNW based on the criteria and is subject to CPC. Once again a false statement.


 
Sorry, what has the net worth of the investors to do with it? The point is that borrowing in a grossly tax-inefficient way to invest in another geared product is unsuitable for anyone.




Mantus said:


> As you can see Gonk, all of your cons either demonstrate that you haven't been researching properly even on this thread or you simply don't want to disengage from posting misinformation.


 
Misinformation like this perhaps?



Mantus said:


> he claims vast experience in syndicates and displays deep knowledge of Augusta, perhaps as a scheme designer himself.


 
I do not have "vast experience", but I have invested in several, and in the course of that have reviewed a number of others. I have already stated I have no connection with Augusta except as an investor in an earlier fund. I have no view on the merits of their current fund and I certainly do not recommend anyone invests in it. All I do say, and I think I have clearly demonstrated above, is that their overall fees are much lower than Brendan's, despite your attempts to claim otherwise, including exagerration of the up front costs and misrepresentation of where they were being spent. The "deep knowledge" I got of these costs was from the Augusta brochure.

As I have already stated I have no connection with the financial services industry, your speculation that I'm a "scheme designer" implies that I may be lying. I am not and I would like you withdraw your comment.


----------



## Mantus

Gonk, you use the language of a player and your adherence to Augusta is not one common to investors but I'm happy to withdraw the implication on the basis of your flawed analysis of costs.

The correct mathematical method is to calculate the opportunity cost of the extra upfront costs as an impact on rolled up profits. Instead you begin with a common IRR and work back, an understandable but amateur mistake. The loss in future profit earning in the Augusta model from the % payment upfront is the key - redo the calc and you will see.

Secondly Brendan upfront fee is flat and not a % which is hugely expensive for large inflows. The Brendan flat fee will diminish as a fixed cost as it closes in on equity injection probably ten times bigger than Augusta, eg @200m it is 0.375%. It is therefore more efficient and will, in the real market place, generate better economies of scale.


----------



## gonk

Mantus said:


> Gonk, you use the language of a player and your adherence to Augusta is not one common to investors but I'm happy to withdraw the implication on the basis of your flawed analysis of costs.
> 
> The correct mathematical method is to calculate the opportunity cost of the extra upfront costs as an impact on rolled up profits. Instead you begin with a common IRR and work back, an understandable but amateur mistake. The loss in future profit earning in the Augusta model from the % payment upfront is the key - redo the calc and you will see.


 
Please don't patronise me. You are wilfully missing the point that the vast majority of the up front costs you refer to in the Augusta fund are not fees charged by the promoters but are in areas where Brendan accepts in its prospectus it will also incur up front costs, such as stamp duty. 

However, despite its claimed commitment to transparency, it has made no effort to quantify them. Therefore, there is no basis to suppose they will be significantly lower in the Brendan fund than the Augusta fund. The actual entry fee, even if it was zero in the Brendan fund, makes a negligible difference to the final comparison of investment outcomes. It is absolutely dwarfed by Brendan's extortionate performance fee. I note, despite being repeatedly challenged to do so, you cannot identify any other fund with a performance fee as high on so low a performance threshold.

You're also missing the point that in both funds, performance and bonuses will be calculated after allowing for all such fees and costs.

As for my "attachment" to the Augusta fund, I repeat I am only using it to provide a worked example of how Brendan's claim of lower overall fees is baseless. The difference in the two performance fees is 920% of the €150 Augusta entry fee.


----------



## Duke of Marmalade

Mantus said:


> Sorry, first I'm no tax expert to be frank with you, but as a PLC it will be no different to any other PLC in the taxes it pays on profits. Most of these will arise outside of the Irish tax jurisdiction and I presume DTA's between EU countries will prevent double taxation. I'm not up on the forensics of UK, German and Portuguese tax so I'm reluctant to hazard the aggregate rate the PLC will pay. The MD, Vincent Regan is a tax expert which will help, former Tax Partner at Deloitte and Revenue Auditor.
> 
> Obviously before shareholders pay CGT, the PLC itself will have paid taxes but using offsets like interest on borrowings etc as offsets.
> 
> Gross Roll Up funds must pay tax on overseas earnings as you know, and the profit to policyholders is 23%. In some cases such as deemed "Offshore Funds" like overseas foreign companies established to invest in property I think the charge can be at 41%. But, once again I'm not qualified to give a definitive answer to your question.



Mantus I really have to raise my eyebrows at this "I'm just a country bumpkin and no tax expert" line 

It was you who introduced this tax thing with a seemingly well informed comment on the arcane workings of gross roll up and 8 year deemed disposal.  Upon reflection, you did totally misread the true tax comparisons between a company based collective investment scheme (like Brendan) and more conventional collectives.  So I'll give you the benefit of the doubt and suppose you heard this 8 year tax point from someone promoting Brendan and you thought that sounded sexy.  But if you are as ignorant in these matters as you purport you should not have introduced a point you did not fully understand.

Anyway, I have corrected the misunderstanding and for the record the position is as follows:

*Life companies/UCITS etc.*

No CGT, Corporation tax or income tax.  Exit tax of 23% paid on punter's profits of which a down payment is required at the 8 year point.  This is administered by the entity.

Some foreign witholding taxes may not be recoverable.

*Brendan*

Corporation tax ranging from 12.5% on trading gains through to 25% on Rental income gains - and of course only on the gain part I wasn't claiming that costs were not an offset.  This is the key disadvantage.  You state that such tax payments are obvious as this is a company - precisely my point, so you do very begrudgingly agree.

This is payable as soon as gains and income start to be generated and by the 8 year point, if the thing is doing any way well at all will have represented a more significant cash flow drag than the down payment of exit tax at most 2 years early.

Brendan may also suffer foreign witholding taxes.

Finally.  I am sure that Brendan has much greater tax minds on board than you or even me but I am hoping you are not suggesting that means Brendan will be able to avoid the above tax disadvantage.


----------



## Duke of Marmalade

RainyDay said:


> I attended the NIB roadshow in Dublin this evening - updates as follows;
> 
> - EH clearly stated that they intend to raise up to €250m and gear up to €1 billion



The Prospectus gives the flexibility to raise between 10M and 250M, which is some flexibility but consistent with the above statement.

The Brochure clearly states that the target is 50M and there is no reference to the 250M.

The Great Debate on this scheme is beginning to focus on some key questions of clarification.  A major one is whether Brendan has already earmarked projects for the funds.  

Experts such as Mantus and Gonk seem to at least agree that this is very important, as both seem to acknowledge that any long delay in sourcing projects could be quite detrimental.  Property investment/development is not like buying stocks and shares, there is a long lead time in sourcing suitable projects.

Where they differ is that Gonk, quoting the prospectus and brochure, argues that no such specific projects exist.  Mantus on the other hand, who appears closer to the scheme, assures us that specific projects are in hand.

So back to the opening quote.  If the original target was 50M and they pull in 250M, how the heck can they have specific projects lined up for 5 times their target?  Is that hotel on the Algarve going to be 5 times higher than planned? 

A huge overshoot on target funding like that, whilst diluting some fixed costs, will nonetheless hang like a drag anchor on Brendan.


----------



## Mantus

Harchibald please take this in the humour its intended, but if a syndicated property scheme had no entry costs, was run for zero and managed by Aliens with time warp technology you'd still be an unconvinced pessimist. Gonk on the other had would be arguing for cheaper space travel while charging through the nose for passengers waiting in his lounge before take off. 

German tax gains can be minimised through Luxco's which will be used by Brendan. Portugese tax can be equally minimised through Dutch companies. Brendan Invts will be using all available legal methods to minimise tax to the parent and obviously increasing the return to shareholders and directors.


----------



## Duke of Marmalade

Mantus said:


> Harchibald please take this in the humour its intended, but if a syndicated property scheme had no entry costs, was run for zero and managed by Aliens with time warp technology you'd still be an unconvinced pessimist. Gonk on the other had would be arguing for cheaper space travel while charging through the nose for passengers waiting in his lounge before take off.
> 
> German tax gains can be minimised through Luxco's which will be used by Brendan. Portugese tax can be equally minimised through Dutch companies. Brendan Invts will be using all available legal methods to minimise tax to the parent and obviously increasing the return to shareholders and directors.



Actually that's not a bad analogy there. Brendan's promise of chain letter type riches based on magic gearing mathematics is as unconvincing as the scifi version you depict.


----------



## Mantus

Brendan's summary is par for the course. Readers should be advised that Brendan is notoriously negative on overseas property and cannot claim to be balanced. The summary, once again, confirms the worst parts of AAM. It is factually wrong in parts eg Directors expertise, on tax and on the data on life funds like the Hibernian Fund which is geared. It is a truly bad piece of analysis coming from someone with an accountancy qualification. 

Just as well that tens of thousands of property investors don't read AAM. Pure junk Brendan you should seriously consider deleting your summary because, left as it is, it is damaging to your credibility.


----------



## gonk

Mantus said:


> Brendan's summary is par for the course . . . It is factually wrong in parts eg . . . on the data on life funds like the Hibernian Fund which is geared.


 
Your tirade is par for the course, as is your faulty grasp of the facts.

Check out this presentation from Hibernian's website on the Hibernian European Commercial Property Fund, specifically page 21 on the fund structure, which clearly states "No Gearing".

[broken link removed]

Mantus, your posts are becoming so outlandish, I can't help wondering if you're connected with one of Brendan's competitors and are posting here to try to sabotage them.


----------



## Duke of Marmalade

Mantus,

You are fond of implying that contributors who disagree with you are anonymous cowards with agendas.  When our esteemed Leader makes similar  comments your reaction is to accuse him of defamation.  That is a double standard, hiding behind anonymity to make personal accusations against someone who does not have that protection.  Please edit your post and correct this unacceptable behaviour.

It is a courageous contribution from our Leader, which I hope will cause the likes of Jane, Bill and Jill to maybe consider just for a tad that Himself is not infallible.  Niall, where are you?  Chance to steal a march. 

On the other facts  which you keep repeating I will make a last attempt at refutation.

There is no way Brendan has projects in hand for 5 times the amount targetted in the brochure, whatever about the target itself. 

The tax thing isn't a very big deal, but it was *you* who raised it in the first place with some smart ass point which you have since admitted you didn't fully understand.  You have admitted that this plc does bear extra corporation and income taxes which would not be present in a life vehicle.  The various Luxco structures are to minimise double taxation, but they cannot reduce the Irish taxation of Brendan.

No one is suggesting a life wrapper of a plc.  That *would* be an extra layer of cost and would negate the life taxation advantage.  The alternative to a plc is to use a life assurance policy as the primary vehicle.  The costs of administering this vehicle are *replacing* the costs of administering a plc, they are not in addition.


----------



## Mantus

Archie, I'm at the end of the line to. I am perfectly correct to harshly criticise Brendan's summary. It remains deeply flawed and is largely based on comparing an ungeared unit-linked policy to a geared plc. It is utter rubbish. Quoted property plc's the world over have gearing like 75 percent, its how the business works. Even CRH has debt equity ratio currently of 56 percent and its a mature large cap.

Gearing of 75 percent is standard to commercial property globally. Brendan's summary is deeply flawed and sensationalist on this point. 

There is a pipeline. Brendan claims none.

Given these facts, and facts they are I am right to suggest that the summary is damaging to the reputation of the directors and by definition is defamatory if knowing these facts Brendan deliberately posted his summary


----------



## Brendan Burgess

I hope everyone appreciates the difficulties we have as moderators. 

Here we have one person, new to Askaboutmoney, posting under 2 or 3 different names. 

They say that they have no conflict of interest, but I for one, am suspicious. 

They make a few valid points, but cloaked in all sorts of nonsense and they avoid dealing with direct criticisms. 

They are offensive to other posters.

So what do we do? Do we allow him to continue to rant on and so detract from this thread? 

Do we delete his more offensive comments? Next thing we will be accused of deleting posts and banning users we don't agree with. 

The moderators have taken the decision to allow him continue in this thread, but he will not be allowed to destroy the summary thread. 

We have taken this decision because he is the only person to publicly support this product on Askaboutmoney. And we welcome balanced comment. 

But please all remember this, when you next see someone accusing the moderators of deleting a post or banning a user because we disagree with his views. 

Brendan
Administrator


----------



## Duke of Marmalade

Hmmm 

On gearing, it is true that plc's and property syndicates use it as a matter of course and I have stated that non recourse borrowing from banks is definitely a good thing.

A normal plc would not see it so much as gearing but as efficient financing.  It would be inefficient to expect shareholders to finance all the fixed assets of a company.  Borrow cheaply on the back of secured assets leaving shareholder capital backing the residual entrepreneurial risk.

What I object to in the Brendan brochure is that bank financing, rather than being taken for granted as part of the efficient financial mangement of any company, is presented as some sort of alchemist's money multipler trick.

We are all agreed that companies like CRH are highly "geared"  yet life companies still only illustrate returns of 6% on these assets.

Somehow, with Brendan it is being suggested that the magic of gearing allows us to talk of returns ranging from 12% to 37%.


----------



## Duke of Marmalade

I am responding to an interesting link to a Bill Tyson article in the Summary thread but I don't want to clutter that thread.

A couple of points.

EH is quoted as making that ridiculous assertion that to say the management charge on Brendan is 4% is equivalent to saying stamp duty on mortgagors is 100%.  Strange that's exactly what Riddler (banned) also said.  Do I really have to spell out the nonsense of that analogy? 

I also see the statement that this is more tax efficient than a life vehicle.  Not sure whether he was quoting Liam D.F. but I think it was part of Bill's commentary.  But Bill didn't get that from nowhere?  I hope I have already shown that if anything there is a tax disadvantage with the plc.  But who is prompting Bill with the misleading info?  Jayz, I really have to get to one of these roadshows, with a tape recorder of course.


----------



## gonk

The Tyson article ends with a fairly detailed section on the risks of borrowing to invest in the fund.

But one thing that no media report which I've seen picks up on is the tax inefficiency of borrowing to invest in this.

One major attraction of borrowing for direct investment in property as an individual is that it's possible to get tax relief on interest paid against rental income.

In this case, it is possible to make a loss after interest and still owe tax. Because there is no tax relief available on borrowings to invest in the Brendan fund, your gross gains must be 25% higher than your interest bill just to break even.

For example, you make a gross gain of €125. CGT at 20% reduces this to €100. If the interest bill on the money you borrowed is greater than €100, you lose. This could be even more of an issue by the time the investment matures. There is no guarantee that capital gains tax will still be at the 20% rate in ten years time. Some parties, such as Labour and the Greens have mooted increases in this rate in the recent past. If it went back to the 40% rate, those who borrow to invest in this could be badly stung for tax on purely notional gains.


----------



## Duke of Marmalade

Gonk, that's a good point on the political vulnerability of the CGT rate.  All Irish tax rates are low by international standards, but the CGT rate is definitely the most politically vulnerable.  The Corpo rate of 12.5% is fairly safe as otherwise it's bye bye Ireland inc.  The income tax rate and therefore the exit tax rate on life products is the political non raisable, but CGT, not at all sure I would bet on this staying so low for 10 years.  On the other hand EH is one of Paddy Power's favourites to be next presi so maybe that will be a protection. 

Anyway we don't want to over egg this tax inefficiency thing.  But it really is galling when we see the likes of a good journo like Bill Tyson regurgitating the Mantus falsehood that Brendan has tax advantages.


----------



## gonk

Harchibald said:


> Gonk, that's a good point on the political vulnerability of the CGT rate.


 
In fairness, all forms of investment are subject to risk from changes in tax law.

What makes this a particularly serious hostage to fortune is the existing tax inefficiency combined with the ten year term, in which it is certain there will be at least two elections and changes of government.


----------



## RainyDay

Harchibald said:


> Gonk, that's a good point on the political vulnerability of the CGT rate.  All Irish tax rates are low by international standards, but the CGT rate is definitely the most politically vulnerable.  The Corpo rate of 12.5% is fairly safe as otherwise it's bye bye Ireland inc.  The income tax rate and therefore the exit tax rate on life products is the political non raisable, but CGT, not at all sure I would bet on this staying so low for 10 years.


In fairness, EH pointed out the specific political risk of possible future increases in the CGT rate at the Dublin presentation which I attended.


----------



## Duke of Marmalade

is a good article. 

I particularly like the following line _"...whole sorry mountain of debt built on cheap money and rising asset prices, especially property..."._ 

The article refers to those other chain letters, the CFDs which are also becoming unstuck. I tell you *the party is over*. 

Brendan is the final excess of an orgy which is going badly wrong - the little guy being invited in by the pied piper.

Amazingly there are those who will seek to argue that these events are very positive for Brendan - just the right time to go buying.  Maybe But the right time to go borrowing?


----------



## Brendan Burgess

Harchibald



> Brendan is the final excess of an orgy which is going badly wrong - the little guy being invited in by the pied piper.


 
Hopefully, you are referring to Brendan Plc here  Otherwise, I have missed out on something which sounds very exciting.


Brendan


----------



## Brendan Burgess

I have just seen the TV ad and Eddie announces that the "prospectus is approved by the Financial Regulator and the Irish Stock Exchange". 

I think it would be far more meaningful to say "This is an unregulated investment". 

Brendan


----------



## Sarsfield

Brendan said:


> I have just seen the TV ad and Eddie announces that the "prospectus is approved by the Financial Regulator and the Irish Stock Exchange".
> 
> I think it would be far more meaningful to say "This is an unregulated investment".
> 
> Brendan


 
But it was advertised by Honest Eddie.  What could possibly go wrong?

And the regulator says the brochure is nice


----------



## Jimbob2

Have to agree with the above.

I saw the ad last night and heard Hobbsey say 'the prospectus is approved by the financial regulator'. But (open to correction) doesn't it come at the end of him telling you all about where the properties will be bought and what type of properties will be in the portfolio.

I think it would be very easy for your average joe with €5,000 to invest to make the assumption that the fund itself has been approved by the financial regulator and I strongly suspect that this is the very reason why the statement is in the ad.


----------



## Jimbob2

*Ad change?*

Just heard the ad on the radio. It no longer states that the prospectus has been approved by Financial regulator. It now says that it was published 'in accordance with Prospectus directive'.

Interesting. I wonder was this a change in the ad or are there a few versions, one of which says it has been approved by the financial regulator. Or has the ad been changed I wonder?


----------



## gonk

*Re: Ad change?*



Jimbob2 said:


> Just heard the ad on the radio. It no longer states that the prospectus has been approved by Financial regulator. It now says that it was published 'in accordance with Prospectus directive'.
> 
> Interesting. I wonder was this a change in the ad or are there a few versions, one of which says it has been approved by the financial regulator. Or has the ad been changed I wonder?


 
I copped that as well. And if it's as a result of Brendan taking on board the criticism of the emphasis they were laying on the prospectus being regulated even though the investment itself isn't, well, fair play to them.


----------



## Brendan Burgess

I drew the ad to the attention of the Financial Regulator yesterday. I didn't get an acknowledgment of my email and I doubt if they acted on it, but it would be nice to think that they heard it themselves and expressed their displeasure.

Brendan


----------



## Refer

Gonk is right if they've change the ad fair enough. On the radio last week btw Hobbs made the same point about the difference and if the ad has been changed already it looks like they did it themselves responding to comments at that point. Surely the regulator examined the ads before use


----------



## gonk

Refer said:


> Surely the regulator examined the ads before use


 
There would be no reason for them to do so - the neither the ads nor the investment are subject to IFSRA's Consumer Protection Code.


----------



## Refer

Perhaps you are right its just that I thought that an application for an public offer for shares would automatically require the Stock Exchange to preview ads and would require legal advisors to denote the correct wording?


----------



## Refer

On the website in the Introduction there is a summary here [broken link removed]

The Prospectus has been drawn up in accordance with Part V of the Investment Funds, Companies and Miscellaneous Provisions Act 2005, Part 5 of the Prospectus (Directive 2003/71/EC) Regulations 2005 (SI No. 324 of 2005), and Commission Regulation (EC) No. 809/2004 - the EU Prospectus Regulation. Accordingly this Prospectus has been approved by the Financial Regulator (being the competent authority for Ireland) in accordance with Part 7 of the Prospectus Regulations 2005 and has been filed with the Financial Regulator accordingly. The Financial Regulator only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive 2003/71/EC.


*Prospective investors should note that Brendan Investments Pan European Property plc (trading as Brendan Investments) is not regulated by the Financial Regulator or the Irish Stock Exchange.*


----------



## DrMoriarty

Refer said:


> Perhaps you are right its just that I thought that an application for an public offer for shares would automatically require the Stock Exchange to preview ads and would require legal advisors to denote the correct wording?


These ads probably weren't even made at the time of the initial application, and in any case the ISE would have even less reason than the IFSRA to examine or comment upon the wording of a TV or radio advertisement.

I would think it's more likely that the wording of the advertisement has been voluntarily changed by _Brendan Investments_, in response to (or in order to preempt further?) criticisms they've received about potentially misleading language, etc.

Perhaps Mantus can shed some light on the matter?


----------



## Duke of Marmalade

We have it definitively in the Sindo. The regulator *did* demand the change in the ad. EH admits as much but says He was about to change it anyway. 

Well done Boss.


----------



## Refer

Yes well done but the timing of the Boss'es letter end last week couldn't have been the cause because the changes happened before his letter was received both on radio and the website above. Gonk is right that the company went about making the alteration itself then. Hmm. The TV ad is unchanged but looks like this is changing too based on the senator's piece, ( which was a bit of classic SR bufoonery I thought)


----------



## gonk

Anyone read Sue Denham's piece in today's (Sep 23) S_unday Times_ where she writes about Hobbs possibly posting here on AAM as "Riddler"? She ends the piece "Asked last week, he [Hobbs] said he wouldn't 'get into all that', *but he did admit to posting on askaboutmoney *under a 'well-known' moniker."

_  Gonk - it is ok and useful to report this piece about Askaboutmoney in the papers.  But we don't allow speculation about the identity of posters on Askaboutmoney itself. So I have deleted your subsequent comments. 

Brendan
Administrator_


----------



## SlenderMeans

Am really struggling to see the relevance of the change in wording. Whether a fund is regulated or not by the FR isn't going to mean a thing if the property maket in Geermany / Portugal tanks.

Having a prospectus approved by the FR again does not imply that you €5,000 is a watertight investment. All that it means is that content of the prospectus conforms with EU regulation


----------



## Brendan Burgess

Hi Slender

In the original ad, Eddie says very strongly and prominently that the Prospectus is regulated by the Financial Regulator. Anyone watching it would think that this gave a large element of security or comfort. 

If the product does not work out, many people will claim that they thought it was regulated by the FR. 

Brendan


----------



## Refer

I checked with an Actuary friend who advises me that their ads were sent to the ISE which is the body dealing with the issue before production. If he is right then the regulator would have found itself on tricky ground, ie nothing non-factual was said. Brendan's point is right on emphasis heightened I'd add by the NR debacle and all the talk about regulation. 

The other interesting thing that arose is that talk between life offices is nervous of a successful PLC launch in the retail market which they dominate with unit-linked funds. The nervousness has to dso with precedent and who will copy cat eg Quinlan, Warren, Ballymore etc. It seems that it was pressure from Life Offices on IFSRA was the driver. 

This is getting quite interesting to watch. Hobbs was on the RTE Sunday morning show and pretty well took the SINDO apart, anyone hear that?


----------



## Bedlam

Yes I heard him on the Marian Finnucane show. He was very annoyed I felt about Shane Ross and the point that Ross made in relation to the fact that the CBRE Report on the outlook for property was 14 months old. Eddie said that this was the only way the prospectus  could be put together and that people were receiving the updated position at the Roadshows.


----------



## Dave Vanian

> Eddie said that this was the only way the prospectus could be put together and that people were receiving the updated position at the Roadshows.


 
This is the third time I've heard the excuse that "updated details are being given at the roadshows."

(1) Nothing in the prospectus, website or brochure about the track record of the directors in actually making money for clients - just mentions that they have been involved in the property business.  But apparently, this information is provided at the roadshows.  

(2) No mention of properties in the pipeline on the promotional material - this too is apparently discussed at the roadshows.  

(3) Now it seems the updated CBRE report is being discussed at the roadshows also.  

The advertising should carry a warning - "unless you attend a roadshow, you'll only get half the story from our promotional material or prospectus."


----------



## ubiquitous

Bedlam said:


> Eddie said that this was the only way the prospectus  could be put together and that people were receiving the updated position at the Roadshows.



And to misquote Groucho Marx, a verbally quoted statistic is hardly worth the paper it is written on.


----------



## Refer

To be fair the 2007 report has been on the advertised Brendan website since the start and it is the case that attaching it formally to the Prospectus could not have been done. It seems extraordinary that the ISE took over a year to process an application like this and thereby required the promoters to link a separate report for 2007. Shane Ross went off half cocked I thought. He believes that the deposit return over ten years will be better than commercial property investment, a bit OTT methinks.


----------



## Mantus

Gonk, the Sunday Times speculation is wrong. Riddler's last post was 11.02 pm Friday sept 7th at which point Hobbs was on the Late late Show. Riddler was somebody else obvious from the writing style. The irony is that jounalists and, concious of the rules about naming, also post here under monikers including on this thread and based at the Sunday Times. 

Some hacks use AAM to drum up stories and, occassionally, when short of ideas resort to quoting nameless sources from AAM.


----------



## gonk

Mantus said:


> Gonk, the Sunday Times speculation is wrong. Riddler's last post was 11.02 pm Friday sept 7th at which point Hobbs was on the Late late Show. Riddler was somebody else obvious from the writing style. The irony is that jounalists and, concious of the rules about naming, also post here under monikers including on this thread and based at the Sunday Times.


 
Thanks for this - I am happy to accept you are correct on this point.

Nonetheless (and I am trying to phrase this carefully to avoid infringing the rule about speculating on specific posters' identities) Hobbs did say to the _Sunday Times_ that he _has_ posted on AAM. And, of course, he has the same right as anyone to post pseudonymously.

But, either he has not posted on this thread to defend his product, which would be odd; or he has, and has not declared his interest, which would be odder still.


----------



## Duke of Marmalade

Mantus, I see _Au Revoir_ does not mean goodbye. Welcome back, we do need some dissent. 

I have already remarked that EH and Riddler share that most bizzarre view that calling 1% AMC 4% is akin to calling stamp duty for a mortgagee 100%. No two people could come up with such a perverse argument independently - and yet there appears to be a good alibi. I suppose Riddler heard/read EH's argument and repeated it, can any sleuth out there check the chronology?


----------



## z109

I think we should be protecting people's identities, as per the ending in Spartacus. So I'll start the ball rolling:
I'm Eddie Hobbs!

(Is that too old a reference for most people?)


----------



## ubiquitous

gonk said:


> ... he has not posted on this thread to defend his product, which would be odd



Why so? Maybe he feels there are other & better ways to communicate to his target market?


----------



## gonk

ubiquitous said:


> Why so? Maybe he feels there are other & better ways to communicate to his target market?


 
Maybe so. But he has acknowledged in the _Sunday Times _piece referred to that he has posted on AAM. Therefore, he is clearly both familiar with the forum and is registered to post on it. In that context and given the heavy criticism here of aspects of his investment product and in particular the marketing of it, I would find it surprising that he would not respond. Given the number of times this thread has been referred to in press coverage of Brendan Investments, he is obviously well aware of it.


----------



## McVittie

Well spotted Mantus. 

Riddler must be chuffed to have made the paper. Interesting observation on media participation too. 

I’d imagine one of the benefits of this thread is it is providing valuable feedback to the promoters of the Brendan scheme. 

I notice that one of Riddler’s posts mentioned disintermediation of the intermediary which is of course is testing the objectivity of so many people in reviewing Brendan Investments. It’s reflected in Refer’s comments too. 

In combining both a vehicle such as the Brendan plc bypasses manufacturers and intermediaries. 

Whatever about the offering itself, one thing it has done is open a new market potential which is probably good for competition and choice.


----------



## Duke of Marmalade

converse2007 said:


> In combining both a vehicle such as the Brendan plc bypasses manufacturers and intermediaries.


 
In doing so one of course foregoes the respective services of efficient administration and financial advice.  This is only a good thing if it saves enough money to justfy these deficiencies.  As I have pointed out on several occasions and no-one has taken me to task, Brendan is at least 4 times more expensive than a typical life assurance investment.


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## Mantus

The premise lacks logic. Brendan's costs structure compares very favourably to quoted property plc which logically have geared balance sheets, evident from examining shares on European exchanges. This is the ultimate test ie open market PLC offerings.

The comparison to retail unit linked funds is unfair to these funds. 

The same error is made over and over again by those technically uniformed about what real disclosure looks like. These mistake the unique Life Insurance Illustrations as full disclosure when it is very far from it compared to the standards of OIECS under UCITS where annual audited accounts act as the dicipline and where TER is the common measure. 

The application of TER on an Irish Life Office Unit Linked fund on a quoted AMC of 1.5% would be over 2% for a really big fund and several times higher for a small one. Put simply the charges surfaced by the Disclosure regs do NOT cover all the costs. 

Secondly the comparison is financially unsound unless it compares geared funds against geared funds in property. As has been pointed out when the Hibernian European Residential Fund which is geared is examined the comparison is poor compared to Brendan. This is because there are more noses in the trough, (a) commissions of up to 5% and Life Office admin charges.

PS. Au Revoir used in common speak means until we meet again.
PPS. Hobbs had a well known moniker familiar to those posting in the early years of AAM before Lord of the Rings was made into a popular movie.


----------



## Duke of Marmalade

Mantus, we are starting to go round in circles, but in pursuit of the _dernier mot_ let me repeat some points, which you simply ignore:

Life office disclosure is *complete*. SoA guidance requires *ALL* costs and charges to be included in the illustrations and the RIY.

The key point about life office disclosure is that it consolidates all charges into a very transparent comparative for the punter at *point of sale* with a 30 day cooling off.

The Brendan prospectus is the equivalent of the life policy document. To be sure, everything is explicitly spelt out but there is no way of knowing what the combination of the various costs and charges amount to in any easily digestible figure - that's why we have disclosure regulations. _Au Contraire_ with Brendan one is left with an impression that the charges are little more than a misleadingly harmless 1% - that's much worse than even pre disclosure representations on life products. 

Brendan has I think listed 7 types of costs and charges in the prospectus. The punter will get her first glimpse of what they all amount to when she gets the first annual accounts. Shock - TER of 6% on shareholder funds, I thought it was 1% plus a few bits and bobs. This enlightenment is coming far too late - there is no way out now, 9 years hard labour beckon.


----------



## Refer

Bertie could never post on Politics.ie or if using a "moniker" make any disclosure that would reveal himself. He would be swamped with grinded axes from every nameless crank and critic who wanted to get stuck into him but would never dare do so using their own names, so I can understand if Hobbs would take a similar view on AAM. Mc Williams takes questions on a website but he controls it to avoid chaos i suppose.

It isn't that important really so long as there is knowledge and information exchanged through constructive debate.


----------



## McVittie

I fully agree with you. The value of a site such as this is its anonymity which allows people to enjoy debate freely. Its real value comes from two things in my mind: the excellent contributions from really knowledgeable posters and its provocation of thought and debate. At times this may descend into a chatroom but I think good quality contributions are easily sorted from the noise of chatter.


----------



## Mantus

Harchibald, that is simply untrue. By that measure Irish Life Offices are more efficient than much larger OEICS. The Disclosure regs do not capture the charges like forv example the account turnover commissions of stockbroker subsidiaries. The quoted amc of say 0.75% is for the Life Office itself to pay for its fund mgt and admin. More is added for distribution commissions. Unit prices are struck after a whole lorryload of charges have been deducted. In the geared syndicate market, moreover, unadited Unit Trusts by specialist admin houses are used as camoflague between Disclosure regs and the cost of these schemes. There are huge loopholes around the Illustration guidelines.


----------



## Ret45

A lot of this discussion seems academic to me. Surely the point is that the assumptions and projections that previously supported this type of venture - cheap credit, capital appreciation, investor confidence, predictible interest rates etc either no longer exist or have been eroded of late. Would any neutral obsever really recommend investing in the Irish property market? 

The property investment train has left town, everyone knows it and no amount of wishing will change that.


----------



## Mantus

That is precisely the point borne out by the research and the plain obvious; the Irish market is dangerous until the transition is over. Brendan Invt has a 5% allocation to Ireland Development and 60% to Germany Invt Property. The 2007 research on the Brendan site supports the short term tactic of avoiding Ireland altogether until there is better Development Land opportunities. The Shane Ross piece was written from the erroneous perspective that BI was exclusively investing in Ireland but SR is not known for consistent precision to put it kindly.


----------



## Duke of Marmalade

CBRE must already be regretting their involvement with Brendan. Usually writing reports is money for old rope with no subsequent accountability.

Brendan prepares to go to a sea whipped up by a financial crisis of Katriona proportions, anchored down with leaden expenses and using out of date maps. 

It won't even reach Rockall before it sinks and along with it the pied piper fuelled dreams of El Dorado of thousands of little people. (Ironically probably will happen in Titanic's centenary year. )

The captain will have escaped a very rich man, though probably forced into exile in Cape Verde.

The recriminations will fly, and hence back to those maps...end of CBRE reputation. No wonder they are already in denial mode.


----------



## gonk

Mantus said:


> That is precisely the point borne out by the research and the plain obvious; the Irish market is dangerous until the transition is over. Brendan Invt has a 5% allocation to Ireland Development and 60% to Germany Invt Property. The 2007 research on the Brendan site supports the short term tactic of avoiding Ireland altogether until there is better Development Land opportunities.


 
This goes directly to a point I have raised several times already. Why is Brendan raising funds for investment in Ireland when it has no near term plans for any specific projects in Ireland? Granted, it's a small proportion of the overall funds, but there is nothing in the brochure or prospectus to indicate this tranche of investment will be held over until it's perceived that market conditions have improved.

I don't know what 2007 research you're referring to Mantus, but this page on the Brendan website, which is reproduced from the brochure, is much more positive about Ireland:

[broken link removed]

It begins: "The Directors are advised by CBRE that the prospects for the Irish investment property market for the foreseeable future are promising, with total returns expected to continue to remain in high double digits over the next 5 year period on the back of rental and capital appreciation prospects."

Yet another instance, it would appear, where prospective investors cannot get the full picture from the prospectus and brochure.

PS, Found the updated report, and again CBRE express themselves as having a positive view of the Irish market. There is nothing at all in it which would lead investors to believe Brendan intends to defer the Irish tranche of its investments.


----------



## McVittie

The boys from Brendan must be cockahoop with the Shane Ross endorsement of their scheme. Sure everyone knows how to read into Ross’s ramblings : you simply take the opposite position to the Rossian theology. Rossian theology seems to be catching on here too !


Definition of Rossian theology: Something new comes along. You get really cheesed off because you didn’t think of it or it’s heresy to your way on thinking. So you have a right go at it, trying to find all its faults. Donning the mantle of the Grand Inquisitor you sally forth. Only to find that crying heresy creates the opposite reaction as people are only too aware of your true motives. After a while people say, well if he’s against it there must be something good in it.


----------



## gonk

Mantus said:


> The Shane Ross piece was written from the erroneous perspective that BI was exclusively investing in Ireland but SR is not known for consistent precision to put it kindly.


 
This is factually incorrect. Whatever you think of Ross's analysis, he does state:

"Eddie and the lads have decided to sink the €50m they hope to raise into property in *Ireland, the UK, Germany and Portugal*."

http://www.independent.ie/opinion/columnists/shane-ross/thumbs-down-to-mr-hobbs-1085842.html


----------



## irishpancake

ubiquitous said:


> And to misquote Groucho Marx, a verbally quoted statistic is hardly worth the paper it is written on.



Ubiquitous, you are indeed seriously misquoting poor old Groucho, seeing as it was Sam Goldwyn who made the now oft-quoted verbal malapropism.



Mind you, good old  was no slouch when it came to one-liners.

A little bit like Bertie not wanting to "upset the appletart" or saying "It took Ireland 30 years to become an overnight success".   

A little light relief...........hopefully


----------



## F. Kruger

Harchibald said:


> Life office disclosure is *complete*. SoA guidance requires *ALL* costs and charges to be included in the illustrations and the RIY.
> 
> The key point about life office disclosure is that it consolidates all charges into a very transparent comparative for the punter at *point of sale* with a 30 day cooling off.


 
Can you provide a link to any 'point of sale' disclosure that includes the cost/effect of gearing on any of the products to which you refer?


----------



## Bedlam

Freddie

I am trying to rememeber the answer to the comment below from another poster. When I saw your post I remember that in the early days you used to debate alot here and if memory serves me right with the person mentioned below. Can you remember the moniker?

"PPS. Hobbs had a well known moniker familiar to those posting in the early years of AAM before Lord of the Rings was made into a popular movie."

Thanks

Bedlam


----------



## F. Kruger

I do remember the moniker but read Brendans comments here

http://www.askaboutmoney.com/showpost.php?p=492470&postcount=191


----------



## Refer

Don't think the Riddler guess is accurate - see my earlier post.


----------



## Duke of Marmalade

F. Kruger said:


> Can you provide a link to any 'point of sale' disclosure that includes the cost/effect of gearing on any of the products to which you refer?


 
I'm not great at links but I am aware that this geared thing did come under specific scrutiny. The issue was not so much about expenses but about using 8% gross return and say 4% borrowing to generate chain letter net returns. This was very definitely banned and it was made clear that the returns were on net assets and before expenses. There was never any issue with expenses, these had to be shown explicitly so 1% AMC would be quite clearly 4% on a 4 times gearing, similarly the RIY would be 4%+.

Mithrandir and Gandolf and Mantus for that matter would be well aware of all this.


----------



## F. Kruger

This is taken from the important notes on a geared property investment with 'full' disclosure​ 
 


> For the purposes of this projection we have assumed that the term will be 5 years.These Illustrations assume a gross return of 6% per annum. This rate is for illustration purposes only and is not guaranteed. The return is after all expenses incurred by the operation of the unit fund, including





> the costs of buying and selling the properties and the cost of servicing the loans.
> 
> These expenses have been spread evenly over the term for illustration purposes. Actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated. The effect of the deductions in the table is to reduce the assumed growth rate from 6% per annum to 2.98% per annum.
> 
> A performance fee is payable when the Fund has delivered a 10% p.a. return on the value of assets in the Property fund. Hence, the Investor would receive back his original investment plus 10% a year, before any performance fee would be payable. This fee would increase the impact of charges on the assumed growth rate shown above.[/quote]
> 
> Now, this particular fund has 66% gearing and the RIY quoted above is before that is applied to an investment of €25K.​
> Can someone calculate the actual RIY on this Regulated 'Full' Disclosure Product after gearing?​


----------



## Duke of Marmalade

Krugie baby, the RIY is 3.02% on the *net* assets. If the Brendan approach was used this would be equivalent to 1.0067% on the gross assets before gearing. 

BTW this disclosure seems to go above and beyond the call of duty. I thought the costs of buying and selling, including stamp duty, did not have to form part of the charges disclosure and RIY. Sure you got this right?


----------



## Mantus

You are clutching at straws. The disclosure requirements do not penetrate all the charges that the Unit Linked fund does not *directly* bear. The comparison as I've said is inaccurate especially when underlying Unit Trusts are used to conceal charges. Check it out.

1. If you want to compare BI use *quoted Property PLC's* where you'll find mgt costs @ 1% to 2% of Gross Assets. Go ask an analyst to run the numbers.

2. The nearest "products" are hedge funds. Look at Friends First Insight Currency Fund wrapping the Alder Capital currency model. See the incentive scheme.

3. Check out Bank of Ireland *Newgrange Fund*. This isn't even a hedge fund. It is a unit trust investing in a contrarian mix of equities. The commission is 3%. The annual charge is 1.5% pa. The incentive bonus is 20% above a hurdle rate of 7% pa, yep 7% pa.

Brendan Investments is reasonably priced. You are desperately trying to undermine the offer. What does it take for you to accept that you are wrong in your approach annd, perhaps, motive?


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## Duke of Marmalade

Mantus, I was replying to Kruger's request for clarification. My post was purely factual, I didn't even refer to BI, nothing I said in that post was in any way tendentious. Why do you react by accusing me of "clutching at straws" and being "wrong in my motives"?

BTW SoA guidance specifically requires that costs in underlying collectives should be part of the disclosure. Believe me there are no tricks, that is the beauty of the SoA involvement - any tricks would be quickly spotted and stamped out.

I have already accepted that Brendan is probably not out of line with its peers on charges/costs, my complaint is that these are not being communicated to the target audience in the same transparency that EH so successfully lobbied to get imposed on the life industry, quite correctly in my view.


----------



## gonk

Mantus said:


> 2. The nearest "products" are hedge funds. Look at Friends First Insight Currency Fund wrapping the Alder Capital currency model. See the incentive scheme.
> 
> 3. Check out Bank of Ireland *Newgrange Fund*. This isn't even a hedge fund. It is a unit trust investing in a contrarian mix of equities. The commission is 3%. The annual charge is 1.5% pa. The incentive bonus is 20% above a hurdle rate of 7% pa, yep 7% pa.
> 
> Brendan Investments is reasonably priced.


 
No, the nearest products are other geared property investments. The above products are not remotely comparable. Once again, what other geared property fund, of any kind, has a performance fee of 20% of gains over 8% p.a.? (The question is purely rhetorical, you understand. It has been put to you and ignored by you so many times that obviously Brendan's performance fee is the highest you know of for a geared property fund.)

Brendan Investments' performance fee is extortionate and quoting an even more extortionate fee on a completely different investment class doesn't alter that fact.


----------



## Mantus

Sorry Archibald I accept your argument fully. It would be nice if the SOA regs covered UCITS, OEICS and PLC's but they don't because unlike Life Products these don't give illustrations of the future AND don't have the appalling track record of the Life Industry which the SOA left run rampant until the IIF Agreement was separately collapsed with zero help from the SOA. Since this enforced change the SOA has behaved impeccably I accept.

BI is subject to independent audit of its activities with a PWC report sent annually to its shareholders, so while it is not bound by the disclosure regs and doesn't engage in illustrations of future benefits, it has to contend with the dicipline of being a PLC - would you accept that is a benefit preferable to the murky middleground of non-life insurance and non-plc syndicates who are not bound by the EU Prospectus Directive?

It makes no sense going through 1.5 years of regulation by the ISE and IFSRA if the resulting Prospectus is of no worth to investors?

GONK; A geared structure is a geared structure. I have given plenty of appropriate examples, Quoted PLC's, Hedge Funds and even a retail Life fund, HLA European Residential Fund. BI is reasonable by these comparators, you however seem determined to repeat your failed mantra.


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## Duke of Marmalade

Mantus, I think that the prospectus is a very professional document.  I am sure that Brendan will be completely compliant with that prospectus.  But for the target audience, the brochure is meant to communicate these matters in plain english.  The brochure IMHO falls far short of the standards promulgated so forcefully by the promoter Himself.


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## McVittie

This thread is in danger of becoming so technically archane as to be useless to the average investor. 

Plain unadorned english (without the rhetoric) should suffice. 

As I read it BI cannot use illustrations. Where used elsewhere illustrations are illusional as they may hide as much as they declare. 

Perhaps it would be help everyone viewing this thread if an opinionated summary of the apparent underlying motives of major posters was set out:

Mantus: Clearly believes that BI is a vehicle that investors should consider and has analysed the offering and found it a fair deal. Motive: persuasion through professional insight and analysis ?

Gonk: Has problems with the scheme. Has vigoroulsy defended competing offering elsewhere on this site.Motive to make a preferred competitor offering look better?

Harchibald: Insider/producer mindset basis of arguments rooted within current producer product set. Opened a second thread to question promoters motives. Motive: Undermine BI and its promoters as seen as threat to status quo ? Probable underlying Rossarian theology.

These are of course my opinion only.

Please ignore the double posting below.


----------



## LDFerguson

Okay converse - they're your opinions.  Here are mine: - 

Mantus - so obviously connected with BI that it hardly warrants writing about.  

Gonk - has repeatedly stated that s/he has no connection with Augusta which I presume is the competing product you mention.  I choose to believe him/her.  I respect everyone's right to anonymity on Askaboutmoney but I would hope that no adult posting here would blatantly tell lies about their connections or lack of them in a sad attempt to further their own arguments.  That would just be pathetic.  I don't believe Gonk has engaged in such practices.  

But again - these are my opinions only.


----------



## Brendan Burgess

_Here is an interesting press statement issued by the Society of Actuaries in February last._


THE SOCIETY OF ACTUARIES IN IRELAND
Press Release
08 February 2007
President of Society of Actuaries warns against risks of unregulated property investments


“In the past few years, Irish investors have enjoyed good investment returns with low levels of risk. But risk is never far away and when it returns, as it definitely will, it will expose the weak underbelly of the economy and lay bare practices that have evolved in the good times that will not be able to stand up to the stress of turbulent market conditions.” 

This was stated today (Thursday, Feb 8th) by Colm Fagan,
President of the Society of Actuaries in Ireland at the Society’s biennial dinner.

Mr Fagan particularly drew attention to Irish investors’ high concentration of investment in property, both through individual property ownership and collective vehicles. “The average Irish investor has a much greater exposure to property assets of various kinds than investors in most other countries. This lack of diversification, often geared up through high levels of borrowing, carries risks which the strong returns of recent years have probably masked.”

“Of particular concern would be individual buy-to-let investments, often overseas, which are completely unregulated and are not subject to the normal statutory protections afforded to retail investors in regulated products. For example, investors do not benefit from full disclosure of charges and sales remuneration applying to most retail regulated products. In addition, some of the claims made for future performance of these investments are very misleading, and the commission paid to the salesperson or intermediary, which does not have to be disclosed, can be particularly high.”

Mr Fagan also cautioned about the risks of certain collective property investments. “It can be difficult for the consumer to spot that some investments are unregulated, given that they may be promoted by entities - such as banks, life assurance companies or financial advisors- that are regulated in respect of other activities. In other cases, the
unregulated property fund may be ‘wrapped’ inside a regulated product, such as a life assurance policy or a pension. While both the ‘wrapper’ and promoter may be regulated, the underlying property investment is often held in an unregulated vehicle such as exempt unit trusts, shares in private companies or co-ownership arrangements. This can lead to risks that most investors are unaware of, including potential problems in realising the investment, transparency on costs and valuations.
Added to this virtually all consumers invest on a substantially geared basis, often in just one particular property located in a foreign jurisdiction.”

Mr Fagan repeated the Society of Actuaries’ call for property investment schemes to be brought within the remit of the Financial Regulator.


----------



## Mantus

Thank you Brendan. This is precisely my point from the SOA.

1. Overseas buy-to-lets, unit trusts, private companies are murky and unregulated.
2. Life Offices use Unit Trust to conceal charges and wrap properties. the most common used are those of ITC and CHC called the Delta and Destiny Unit Trusts respectively. So you put your cash into a regulated Life Office and hey presto it disappears down a trap door into an unaudited and unregulated entity that has no link to IFSRA.

BI as a PLC is unregulated but its Prospectus has been regulated. It delivers the dicipline of annual audited accounts. It treats people's money as from Shareholders and what that entails ie ownership and not investors on a ride in a life wrapper, private company etc. 

The statement from the SOA is precisely why the PLC route was chosen and FYI I have consistently brought the precise same subject to the attention of IFSRA and the media.

I accept that BI is not regulated but the PLC entity has superior transparency and protection including a board chair like Dermot Flanagan SC. It will be duty bound to act at the top standards expected of a PLC. If such PLC's were fully regulated by IFSRA a full application would have been sought I feel sure but BI would never have suggested going the Lifew wrapper route.


----------



## gonk

Mantus said:


> GONK; A geared structure is a geared structure. I have given plenty of appropriate examples, Quoted PLC's, Hedge Funds and even a retail Life fund, HLA European Residential Fund. BI is reasonable by these comparators, you however seem determined to repeat your failed mantra.


 
You castigated Brendan Burgess for comparing BI with another property fund which is ungeared:



			
				Mantus said:
			
		

> c. You compare Brendan, a geared PLC with an ungeared Hibernian Life Fund. You ignore the geared Hibernian Fund I have given you and which is a more valid comparison, its European Residential Fund. Your entire thesis therefore about relatively high charges is fundamentally flawed.


 
If you argue that comparison of charges with an ungeared property fund is invalid, how much more invalid are your comparisons with a hedge fund investing in currencies and an ungeared equity-based fund? You're unable to come up with an example of any geared property fund which has overall charges close to BI's and the comparison with the Friends First and Bank of Ireland funds is clutching at straws. 

As for my "mantra" being failed - that's your opinion. My opinion is the only failure involved is your failure to meaningfully address the question.


----------



## Caoilfhio

*Very Naughty new Brendan Investments vehicle*

I work in a Life Company that markets and sells Geared Property Funds. It is clear to me that the Brendan Product is a poor one.

For the record
- The charges are high.
- The level of gearing is very high - much higher than normal.
- The transparency of the Prospectus is poor

Indicative returns (the only numbers are where it is twice mentioned that the Brendan Fund is better placed to deliver than the 12%-16% pa target of other commercial funds) are a disgrace. My industry is correctly not allowed discuss returns on this basis.

In addition, I would only allow this level of gearing at the very top end of the market where clients would be professional investors or in receipt of professional advice.

So this Product wins my naughty prize of the month competition.


PS As Consumer Champion Eddie has a huge conflict of interest here. If he recognises the conflict, he should not have taken on the role or he should relinquish his Consumer Association role. If he does not recognise the conflict, then he should not have the Consumer Association role.


----------



## Yellow Belly

All this technical jargon being discussed is fine, but can someone please answer the following for me (as a Joe Public investor):


What initially does it cost to invest €100k in this BI deal?
Am I purchasing shares in this "plc"?
The annual "gross asset" value charge seems rather high, surely this should be on the "net asset" value which is the REAL measure of growth of the investment?
If this is a plc, and I am a shareholder, where do the "performance" fees go? Onto the plc's bottom line- where I may share a dividend from?
How do I get my money back? When can I get it back?
How does this "set up" differ from other geared property investments I have from qualified investment funds (Custom House Capital) and Hibernian Life?
Apologies if my queries are mundane, but I am merely asking for a lay man's explanation.

Any opinions are welcome.


----------



## Duke of Marmalade

converse2007 said:


> Harchibald: Insider/producer mindset basis of arguments rooted within current producer product set. Opened a second thread to question promoters motives. Motive: Undermine BI and its promoters as seen as threat to status quo ? Probable underlying Rossarian theology.


 
Converse, Fergie fairly slapped you down on your categorisation of Mantus and Gonk.

I have admitted to involvement in the conventional retail investment industry, particularly on the life side. I am no fan of any of these property deals for the reasons set out by the SoA. I am not in the least bit afraid of any threat.

You might not believe it but I was a fan of Himself in the early days when he took on the life industry. Niall Brady's article sums up perfectly my feelings. With hindsight we can see all that consumer crusading as self serving publicity seeking after all. In the new role as Pied Piper every standard that was campaigned for has been ignored. In the words of Brady "consumer champion turned salesman".


----------



## Mantus

There are a number of personal matters entering the thread but let me address. The person you refer to is not a Director of CAI. Any advisor including the one about whom refer is entitled to engineer and distribute an investment proposition much like many other firms. Consumer advocacy was done voluntarily by the same person since the early nineties. To suggest that 16 years of such work was in preparation to metamorphisise into a salesman is a the type of slur that the ST has been engaged in continuously for several years during which the ST regularly relied upon a convicted fraudster as its source. It now relies on cheap shots carrying out the orders of its editor who has publicly announced his dislike of Hobbs in 2005.

To take this down into questioning the integrity of one of its promoters is telling and, frankly, old hat.


----------



## Refer

Gentlemen could we please return to the topic. I dont care who is who. Since entering Mantus has put up a convincing case for BRENDAN INVT in my opinion. To answer the questions raised, the min is 5k, you get shares, the 1% MGT FEE is on the gross assets but seems to be on the lighter side of what quoted property plcs charge, the performance fee is on the internal rate of return on maturity when cash is paid back in one lot or in strips to investors. The profit share is 80% TO SHAREHOLDERS above 8%.

The key is if you believe a leveraged return on german investment property and portugese touristic developments will perform well over the next decade and you are prepared for the risks spelt out. If not avoid this investment opportunity. If you do, this is a good diversified investment away from all our high reliance on Irish property. I see construction stocks now getting a hammering.


----------



## Duke of Marmalade

Yellow Belly said:


> All this technical jargon being discussed is fine, but can someone please answer the following for me (as a Joe Public investor):
> 
> What initially does it cost to invest €100k in this BI deal?
> Am I purchasing shares in this "plc"?
> The annual "gross asset" value charge seems rather high, surely this should be on the "net asset" value which is the REAL measure of growth of the investment?
> If this is a plc, and I am a shareholder, where do the "performance" fees go? Onto the plc's bottom line- where I may share a dividend from?
> How do I get my money back? When can I get it back?
> How does this "set up" differ from other geared property investments I have from qualified investment funds (Custom House Capital) and Hibernian Life?


Yella belly, I will presume the questions are bona fide, probably a naive presumption in these parts , and your last question suggests you ain't as green as you are yella.

1. It costs €100K Do you mean what are the entry costs? There is no commission because there is no advice, and boy do you need advice on this one. On the other hand if you wade through the hubris in this thread you will get on balance, IMHO, good advice. I particularly recommend the Boss' summary.

Set up costs will be €750K in total. So, depending on how many sign up, the share of set up costs in your €100K will be between €350 and €7,500. Pity there is no Cooling Off, bit of a dud if the set up costs turn out to be at the high end.

2. Yep.

3. It is typical of the genre to quote the AMC on the gross assets, but as you will glean from most posters on this thread this should really be quadrupled and expressed in relation to the net assets. 

4. Performance fees as with the AMC go to the management company, not the plc.

5. This is your best question. 7 to 10 years we are told, and that would be typical of the genre. At that time the assets will be sold and the company will be liquidated and shareholders will get their share of the proceeds.

The underlying assets are by nature highly illiquid but, as the promoters say, they will attempt to match buyers and sellers of the shares in the plc in a so called "grey market", but I wouldn't rely on this facility. 

6. Not too sure about the comparatives. Surely you're better placed. Personally, I would prefer some heavy weight institutional involvement. The management team looks light to me.


----------



## Refer

Sorry, just two points. IMHO mantus took brendan's summary apart. It relied on poor comparisons. The total set up cost is indeed a flat 0.75m. If it raises 100m the apportionment for your 100k is 0.75% or €750. If it raises 250m that falls to less than €300. It will at least I would suggest raise 50m so you can expect a max of €1,450 and a min of €300.

No commission is deducted. The 750k is direct cost recovery I presume. 

It differs only in its structure as a PLC. There has been much discussion on comparison pricing and in my view Brendan Investments has stood up well to the critics presented.


----------



## gonk

Refer said:


> Sorry, just two points. IMHO mantus took brendan's summary apart. It relied on poor comparisons. The total set up cost is indeed a flat 0.75m.


 
Page 21 of the prospectus clearly states that the figure of €750,000 for setup costs and the cost of the share offer is an _estimate_ and the estimate is based on the assumption that investment funds of €50m are raised. This would be equivalent to a 1.5% entry charge. The prospectus does _not_ state that the figure of €750k is a flat figure which will remain constant regardless of the total investment raised.

Presumably, the costs associated with raising funds are proportional to the sum raised. If this were not the case, there would be no need to state that the estimate is based on the above assumption.


----------



## LDFerguson

> IMHO mantus took brendan's summary apart.


 
Isn't it interesting to see how two people can read the same thing and form a totally different opinion of it? From where I'm sitting most of Mantus' points in the summary thread were comprehensively disproven in this one.  But this, of course, is just my humble opinion.


----------



## F. Kruger

Refer said:


> The total set up cost is indeed a flat 0.75m.


 
Where did you get this from?

If the fund raised just €20m, would the set up cost be still €750K?


----------



## Duke of Marmalade

*Re: Is the gearing too high?*



Caoilfhio said:


> - The level of gearing is very high - much higher than normal.
> 
> In addition, I would only allow this level of gearing at the very top end of the market where clients would be professional investors or in receipt of professional advice.


 
Interesting discussion point - can you get too much of a good thing? 

First thing is that for the same property exposure the higher the gearing the *less* the risk. Yep, you read that correctly. A portfolio consisting of 5K in BI and 5K on deposit has the same gearing and property exposure as 10K in a 50% geared property fund but has a stop loss at 5K. Makes sense the higher the gearing the higher the risk borne by the bank and the lesser the risk borne by the punter. 100% gearing is free bet.

But here's the rub. What is the cost of the borrowing? If BI's costs of borrowing are the same as a 50% geared fund, it is indubitably better. But if BI's costs of borrowing are even 1% higher than normal that will be geared up to be a significant drag on the fund.

Not enough attention is being paid to this vital aspect - have the promoters secured the necessary credit lines and at what costs?

Incidentally, I disagree that high gearing is suitable for HNW. On the contrary, if you have lots of dosh on deposit you shouldn't be gearing at all even on a look through non-recourse basis. Gearing is especially suited to those strapped for funds, provided they understand the nature of the beast.


----------



## MichaelDes

*Re: Is the gearing too high?*



Harchibald said:


> But here's the rub. What is the cost of the borrowing? If BI's costs of borrowing are the same as a 50% geared fund, it is indubitably better. But if BI's costs of borrowing are even 1% higher than normal that will be geared up to be a significant drag on the fund.


 
Harchibald

Good point - has a rate been finalised yet? Is it interest only or capital repayment? Will the properties invested in be able to wash their faces - i.e. pay at the same level of the borrowing? 

Previoulsy mentioned Ireland or UK, can't wash their faces as far as I'm concerned. But if they all did during the term, then capital appreciation across the portfolio would have to be 25% to achieve the 8% IRR (stand to be corrected), as long as borrowing were not a drag. Did the showcase events give illustrations on how mathematically it would work (unless it did in great detail I wouldn’t touch it with a barge pole) - or is it vague like everything else? Please do not post that property traditionally doubles every seven years etc.

Finally as a lot of the investments choices are 18/24 months out of date – I’m surprised he didn’t include Dubai. But I suppose unlike Turkey it’s not in Europe yet. Maybe another time?


----------



## Duke of Marmalade

*Re: Have I been too harsh on Brendan?*

This gearing thing set me off thinking.

Compare the following 2 portfolios:

Portfolio 1: 5K in BI, 15K on deposit

Portfolio 2: 20K in ungeared conventional unit linked property fund

Same exposure to property

BI probably edges it on costs & charges though the performance bonus complicates the calculus (I think SoA might have this one wrong in quoting RIY on net assets)

So that leaves the difference being that portfolio 1 will be worse than portfolio 2 to the tune of the difference between borrowing rates and deposit rates on 15K

In return for these financial intermediation costs there are two benefits. In the first place, the main reason for borrowing, access to funds. In the second place there is stop loss insurance. Portfolio 1 cannot lose more than 5K. 

Some observations on this trade off:

In general, the benefits are of less importance to HNW customers

The higher the gearing the greater the stop loss insurance. Indeed at 50% gearing one might say the benefit is negligible, at 75% it certainly isn't. Yes the insurance will cost but there is an arbitrage here, the bank can price the risk with the benefit of diversification.

I think I agree with Fergie, this has a role (if you still like property, I don't) in a diversified portfolio. Let's say it is good for 10% of your investible funds. By dropping the entry level to 5K BI becomes accessible to folk with 50K rather than the usual 500K. Credit where credit is due.

I still think Himself should have been much more circumspect in its promotion, given the target audience, His own unbelievable profile, and His record in championing transparency.


----------



## Yellow Belly

_

Yellow Belly 

You should not waste so much time composing a long, interesting post and then inserting a totally unnecessary comment which causes me to delete the post. You may repeat the post with the red herring omitted. 

Brendan
Administrator
_


----------



## IFT

edit...


----------



## Duke of Marmalade

Yellow Belly said:


> Initial charges- they might be €750k in total, but they may not be. Therefore no one can tell me EXACTLY what the entry costs are.


 
Presumably that is usually the case with these things. My guess is that with the heavy advertising and having to change ads at behest of Regulator costs will exceed that earlier estimate. But that's not the main risk in respect of set up costs, the main risk is getting enough subscribers to spread it amongst. At the minimum 10M this could leave the fund up to 10% _(or should that be 2.5% can't make up my mind whether costs/charges should be seen in relation to net assets or gross, though I'm inclined to think the latter)_ down before it starts, at 250M this is hugely diluted but the downside now is how to find suitable investments for that 1Bn war chest. I presume the optimum result for investors would be if the target 50M was raised.


----------



## gonk

Harchibald said:


> Presumably that is usually the case with these things.


 
In my experience, usually charges such as this are set out much more clearly, as a percentage of the funds invested which is fixed from the outset. Contrary to many claims by Hobbs and other Brendan directors, there is effectively an entry fee for this investment - the difference is no-one knows how much it's going to be.

This is one of the biggest problems with Brendan Investments - the prospectus is out-of-date and riddled with gaps in information. 

It is impossible to make a properly informed assessment of the investment on the basis of the prospectus - some of the gaps may be partially filled in at the roadshows, but this is not good enough. As we're continually reminded, the prospectus is regulated. Information provided at the roadshows is not.


----------



## Brendan Burgess

Now, now Harchibald, this is bordering on the defamatory 



> I still think Himself should have been much more circumspect in its promotion, given ... His own unbelievable profile



But a good one none the less.


----------



## Duke of Marmalade

Boss, are you not softening a bit towards it?  I think we both dislike it as an investment, but if you like property and haven't much to spare maybe worth a few grand.


----------



## Brendan Burgess

Just in case there is any doubt, the more I see and hear about the product, the more I dislike it and the more I think that it is being inappropriately promoted. 

Brendan


----------



## Mantus

You can take your case to open public debate and out of this cesspit any time you like. You can also go to the Regulator again, although I suspect your credibility runs short there.

If you believe that there is mis-selling say so now. Charge the directors of this company now and be prepared to defend yourself for doing so. In other words Brendan put up or shut up.


----------



## cerberos

Mantus what connection or links do you have to this investment vehicle?

Personally I would not touch it as there are better places to invest my hard earned money.


----------



## Refer

Maybe Brendan isn't levelling a charge of misconduct but if he is I look forward to the fireworks as Hobbs is likely to defend is reputation directly. Brendan, what is your position?


----------



## MichaelDes

cerberos said:


> Mantus what connection or links do you have to this investment vehicle?
> 
> Personally I would not touch it as there are better places to invest my hard earned money.


 
You are correct. When I first heard about it, I initially considered a €20-€50k position purely as a punt. However it is very clear this product is all glitz with no substance. For a company looking to manage possibly €1000m, they are completely vague on a "nuts and bolts" strategy. What they have put together any half-wit accountancy company could have put together with a P.R. firm or for that matter anyone with a good command of English. Had it any decent substance, then you could consider. But this makes me feel its team are very light on experience. What a pity.

I like Eddie Hobbs in terms of what he has achieved but I think this is a mistaken move for him. I wish not be negative about things but its reality. Mantus - can you convince me otherwise on its strategy? I would like to be persuaded.


----------



## DrMoriarty

cerberos said:


> Mantus what connection or links do you have to this investment vehicle?


 I suspect you're no more likely to get a straight answer to  than the rest of us, cerberos.


----------



## Refer

Des, the strategy is primarily german commercial according to their briefing. According to the Directors they have options on hotels and offices in Dresden I think. One of the Directors, a chartered accountant, H. O'Neill is to be full time there. The german content is high at 65% or so. Most of the rest is in tourism projects in Portugal around a new 700 acre F1 sport and technology park.

The problem is the personalised focus on Hobbs IMHO. Two board directors appear to have a lot of development experience, the MD V. Regan and P. Owens with Gross development experience of 1.6bn. The chair is a SC I never heard of but he seems to specialise in infrastructure. Hobbs might seem glitzy as you say but this is a strong team. Owens and Regan are well regarded according to business circles in munster.


----------



## MichaelDes

Refer said:


> Des, the strategy is primarily german commercial according to their briefing. According to the Directors they have options on hotels and offices in Dresden *I think*.


 
It is these glib bits of information that frighten me and also the word "I think" (I know you intention well but everybody should know where this thing is going - rather than them waiting to get the money before deciding on a definite plan of attack. Generalities for now is not good enough.

The prospectus should have given more insight and analysis into each of the markets such as Ireland, UK, Germany and Portugal. If they provided more background on each of them according to a background analysis of Warehouse, Retail, Office market A & B Cat, Logistics, Residential, Hotel etc etc and tried to develop area's of value within, backed by strong market analysis -then I would have more faith in a €1000m team. I'm sure they may be good as individuals but I have my doubts, especially given the documentation supplied to date by CBRE.


----------



## ajapale

try to keep on topic and avoid personalised comments.
Thanks
aj
(moderator)


----------



## gonk

Refer said:


> The problem is the personalised focus on Hobbs IMHO.


 
If this is the case, it's a problem Brendan have brought on themselves.

All the extensive TV & radio ads are fronted by Eddie.

Go to the home page of the website and who do you see grinning at you?

[broken link removed]

Go to the "About Us" page of the website, and guess who is the only board member whose picture is reproduced?

[broken link removed]

The intro to the product brochure is written and signed by Eddie (with another photo of his cheesy grin.)

The whole thing is being sold on the basis of Eddie Hobbs's public profile & reputation with very scanty information on the specifics of the investments.


----------



## IFT

edit...


----------



## gonk

Mantus said:


> 3. Check out Bank of Ireland *Newgrange Fund*. This isn't even a hedge fund. It is a unit trust investing in a contrarian mix of equities. The commission is 3%. The annual charge is 1.5% pa. The incentive bonus is 20% above a hurdle rate of 7% pa, yep 7% pa.
> 
> Brendan Investments is reasonably priced. You are desperately trying to undermine the offer. What does it take for you to accept that you are wrong in your approach annd, perhaps, motive?


 
If any doubt remained about how ludicrous the above comparison of this fund with Brendan Investments is, it's demolished by this article in today's (Sep 30) _Sunday Business Post:_

_[broken link removed]_

_Newgrange, the investment fund managed by Chris Reilly, is showing a 5 per cent gain after its launch last December, despite the turbulence in domestic and international stock markets, according to Bank of Ireland Private Banking._

_*Kevin Quinn, director of Bank of Ireland Private Banking, said the fund had raised about €400 million from approximately 200 high net worth customers, who each put up a minimum investment of €2 million in cash.*_

Mantus would have us believe an ungeared equity-based fund with a minimum investment amount of €2,000,000 is a valid comparison with a mass-market geared property investment product with an entry point of €5,000. I can do no better than to quote Mantus himself from the summary thread on this topic:



			
				Mantus said:
			
		

> C'mon Brendan your last point is extremely poor. You've compared a geared and ungeared investment. This is financially inaccurate. You have then come to a set of conclusions. You are now aware of your error and you choose not to acknowledge the mistake.
> 
> You are trained in financial management which includes examining projects and your training must inform you that your methodology is corrupt.


----------



## LDFerguson

I see that Hibernian are now offering a geared version of their European Commercial Property fund with an annual charge of 1.2% of Gross Asset Value (GAV) for retail investors which equates to 2.4% of Net Asset Value (NAV), as target gearing is 50/50.  NAV is lower for pension fund investors.     

Which compares with BI's 1% GAV / 4% NAV with 25/75 gearing.


----------



## Duke of Marmalade

Yes, Fergie that makes BI look okay.  Why are pension fund investors NAV lower?


----------



## LDFerguson

You'd have to ask the powers that be in Hibernian.  I guess it might have something to do with longer anticipated duration of a pension investment, but I'm only speculating.  

Of course, the Hibernian fund doesn't feature explicit bonuses for the fund manager at certain thresholds.  Although I'm sure Mantus will argue that as this is a life fund there are hidden charges of all sorts lurking around every corner of it.


----------



## MichaelDes

Per earlier thread, higher gearing sets higher risks to the provider to hedge with lesser to the investor. Also if capital appreciation happens it provides better returns . Given the straight choice between BI and Hib with same IRR and investment choices - I’d pick BI (Would not as be upset about 4% GAV on .75 gearing).

However, when is Brendan providing the promised update on property? Has it gone out yet? I'd need a hell of a convincing to alter my mind.


----------



## Duke of Marmalade

I think that on gearing and charges grounds, BI does look superior to HIB.  But which team would you have more confidence in to pick the right investments?


----------



## gonk

MichaelDes said:


> However, when is Brendan providing the promised update on property? Has it gone out yet? I'd need a hell of a convincing to alter my mind.


 
It's been available on their website for a while now.

[broken link removed]

It takes the form of an update by CBRE of their original 2006 report for BI. It is a general commentary on the property market in Germany, Portugal, Ireland and the UK. It contains absolutely no specific information on the actual investments BI will undertake.


----------



## MichaelDes

gonk said:


> It contains absolutely no specific information on the actual investments BI will undertake.


 
Gonk,

Never came across this before but didn’t miss much, as you said, it contains nothing of any real value and is a hotch potch of many things. Harchibald....in an even contest it would have to be Hib's hands down.


----------



## Refer

From what i've learned its the way the regulation process works may explian the information gap. The prospectus can't be altered without the regulators approval and, certainly based on my experience they are very slow on just about everything. The prospectus can't specify particular acquisitions because the acquisitions can't be made until the equity is collected - a catch 22 for BI it seems.

It is within the wit of BI to issue an updated prospectus though with the 07 research and separately to publish info on target properties which I suspect will happen.


----------



## Duke of Marmalade

Great fun from the Senator in today's Sindo. Sorry I can't do links, but the gist is as follows.

The Senator had a lash at Himself two weeks ago.

Himself lashed back next day on Marian Finucane show, accusing Senator of not reading the BI prospectus.

Senator lashes back today, admitting he did not read prospectus but has since corrected that.

7.5% set-up costs, 4% annual management charges and a complete blank cheque for the directors, including Himself, when it comes to expenses.

This last point is new (I think). Normally. in these situations there is some institution involved which is here to stay and wants to sell further schemes to its clients.

In the case of BI what is there to put manners on the directors? Who decides, for example, the terms of Himself's contract?


----------



## IFT

edit...


----------



## Refer

Like two kids in a school yard! Apart from the points we have mulled over here there isn't much new. Ross believes that deposit accounts trump european property over the next decade. Hobbs believes otherwise that that BI costs are reasonable. This is three weeks in a row in the punch and judy show. Love to hear them on a head to head but fear that the Senator would get chewed on the knowledge front!


----------



## Duke of Marmalade

Refer said:


> Apart from the points we have mulled over here there isn't much new.


 
I think his highlighting of the blank cheque the boys have is new. We have been agonising over whether 1% is 4% or what the impact of 750K might be, but understandably we have ignored all the various expenses which are not quantified. Where are the checks and balances. These guys can throw as much money as they want at advertising, for example, knowing that will be the first charge against the punters. They can agree whatever contracts they like between the company and the directors. There is a definite smell of hit and run about this.


----------



## gonk

Harchibald said:


> understandably we have ignored all the various expenses which are not quantified.


 
I didn't:

_"in their prospectus Brendan themselves disclose the following similar categories of charges and costs which their fund will be subject to, in addition to their annual management fee and final performance fee:_

_1. Acquisition of properties_
_2. Development of real estate_
_3. Interest and admin costs_
_4. Development management expenses _
_5. Costs of external advisors_
_6. Costs of the offer itself, estimated as a one off of €750k_

_But because Brendan have no specific plans publicly disclosed at present, they are unable to quantify any of the above charges except the last - investors must buy a pig in a poke."_

http://www.askaboutmoney.com/showpost.php?p=486099&postcount=102


----------



## MichaelDes

Reference the FT article that the senator refers to, I wouldn't take the led as to what Goldman Sachs is doing as a benchmark for anyone elses investment decision. GS has made plently of gaffs of its own over time and it may be divesting certain portfolio's as a result of its own tightening liquidity. This has been ongoing for over 4 months. Many other private equity and hedge funds of similar size and stature have a different view. One article from a trawl of the internet is not enough.


----------



## Refer

Having invested in a German property syndicate through an accountancy firm I have a keen interest. Ross analysis is typically overblown. Most analysts agree that investment inflows into the commercial market in germany are growing. Des I believe is right. GS sold off half of a portfolio they'd bought to another buyer quite quickly which looks more like profit taking and shows good market liquidity imho. 

While it is understandable that Hobbs has riled the writer I wouldn't put too much faith in Ross analysis. He confesses to no knowledge about continental property so I guess at least he is being honest if ignorant on the subject.


----------



## almo

Having spent the weekend looking through the details, having been made aware of it belatedly on RTE1 radio adverts, and discussing it with a number of investment people both at home and abroad, it does seem like you're better off going to Shelbourne Park and sticking your cash on the number 4 dog.

Shane Ross has gone a little ott in condemning it, but how else to wake up the sheep who will flock to invest?  

Interesting to see a number of 1st time posters who popped up - esp a once off who stuck in a link to Mr. Hobbs gamble.


----------



## kaplan

Almo
How's property in Croatia, Russia, Rumania or Garradrimna these days ?


----------



## LDFerguson

> Having invested in a German property syndicate through an accountancy firm I have a keen interest.


 
Refer - thank you for this.  It's always useful to know where posters are coming from.  Can I ask you if you have any connection to Brendan Investments?


----------



## almo

Sorry, don't know what is Garradrimna, or Rumania (not being smart), or Russia other than I get there regularly.  Croatia I live here, often happily.  

I'm trying to figure if this in an unintelligent smart aside or a serious question, perhaps you could enlighten us Kaplan?



kaplan said:


> Almo
> How's property in Croatia, Russia, Rumania or Garradrimna these days ?


----------



## MichaelDes

almo said:


> It does seem like you're better off going to Shelbourne Park and sticking your cash on the number 4 dog.
> 
> Sheep who will flock to invest?
> .


 
I'd put a two way on number four to increase the likelihood of a win  . 

But seriously, where should persons who typically use investment companies and managed funds etc, put their monies these days other than say commodities etc. Property done right, provides excellent returns due to capital appreciation, rent flows and the ability to leverage that few other choices allow. 

P.S. I'm no fan of the scheme but it is not fair to call persons to invest as sheep, many are more sophisticated.


----------



## IFT

edit...


----------



## almo

Michael, unfortunately this is very similiar to the Cape Verde scheme, and anything that a celeb puts their name to.  It is, admittedly, different to a footballer flogging paris of branded boots that then are suspected of injuring said players (I believe people hurt people, not boots).  You have a man using his status as a manufactured celeb to flog off investments in a scheme that has more than a taste of pyramid about it.  I hope to goodness I'm proved wrong, as you are right, it's not only sheep caught by the glamour and name, also investors who figure that the man must know something that the rest of us don't.

To each their own.



MichaelDes said:


> I'd put a two way on number four to increase the likelihood of a win  .
> 
> But seriously, where should persons who typically use investment companies and managed funds etc, put their monies these days other than say commodities etc. Property done right provides excellent returns due to capital appreciation, rent flows and the ability to leverage that few other choices allow.
> 
> P.S. I'm no fan of the scheme but it is not fair to call persons to invest as sheep, many are more sophisticated.


----------



## MichaelDes

IFT said:


> With the negative press this scheme is getting coupled with tighter personal liquidity, I wonder whether this scheme will ever get off the ground. If it doesn't, I guess those advertising costs are going to have to be carried by the promoters.


 
It reminds me of the time a farming company was doing a press launch for beef sausages, years ago through Sainsbury’s...on the day of the foot and mouth outbreak. That company failed to launch.......


----------



## Refer

I don't buy the SR line on Germany that's all and I think his analysis of costs adds nothing to what we've discussed. I don't see the scheme as some kind of con, far from it. I don't think that the costs are too far out of line with hedge funds and other geared investments and I would be cautious in suggesting that its promoters are profiteering or its investors misguided.


----------



## ubiquitous

Refer said:


> Ross analysis is typically overblown.



Ross did not make any analysis in relation to Germany. He merely cited an FT article.


----------



## MichaelDes

ubiquitous said:


> Ross did not make any analysis in relation to Germany. He merely cited an FT article.


 
By citing a negative article at a time of the liquidity crisis may have more to do with that crisis affecting GS rather than Germany as an investment location. If you search commercial property under the FT there are many of their articles with a completely different slant - esp. an open pull out paper of recent weeks. What he purports to me is a negative against Germany based on this article, which fails to get to the heart of GS motives of selling. Extract

"_According to the FT, Goldman Sachs has put German property portfolios worth €3bn up for sale. The article signals that international property investors are exiting Germany. The upward trend in German property could be in reverse. Just in time for Eddie's entry"._


----------



## ubiquitous

Indeed, but that is hardly "analysis" on Ross' part?


----------



## MichaelDes

ubiquitous said:


> Indeed, but that is hardly "analysis" on Ross' part?


 
It's not but its a cheap shot non the less.


----------



## Refer

I know it is a separate issue really but Ross is not credible. Last week he castigated the Irish equity sector for using CDF's but Ross himself is a director of several hedge funds that use CDF's and expose fund NAV to the potential for large losses by using derivatives and options. This week he is going on about leverage in property funds. I find him hard to take seriously but he is entertaining.


----------



## almo

Is he pushing any of them refer on a b ig public scheme?  Just asking as I don't know.


----------



## bungaloid

Refer said:


> I don't buy the SR line on Germany that's all and I think his analysis of costs adds nothing to what we've discussed. I don't see the scheme as some kind of con, far from it. I don't think that the costs are too far out of line with hedge funds and other geared investments and I would be cautious in suggesting that its promoters are profiteering or its investors misguided.



It has a fee structure similar to hedge funds yet this vehicle is aimed at mom & pop not professional investors.
There are a wide range of public limited real estate companies and REITs quoted on European and UK exchanges. If you want much cheaper and less risky exposure to German property check out  and deal through your stockbroker. It is scandalous that financial media (even Shane Ross who I respect) don't point out this simple fact.

Unfortunately with celebrity endorsement and media campaign a lot of inexperienced people are getting ripped off.


----------



## MichaelDes

I think G-Reits have not been introduced but are being muted forwarf of 2009. Istbc though.


----------



## Refer

Thanks for the tip. I'm aware of ETF's and have invested in the EPRA eurozone ETF in the past. REIT's is of course another construction. BI however is much like an underlying ETF stock except it is unquoted so ETF's and REITS don't save costs by bundling either stocks or properties / developments. I have examined the claim that BI admin costs as a % of gross asset value is not out of quilter with quoted PLC's and, sorry to say it stacks up. 

I've also read lots of research on Germany and the proposition is reasonably sound on foot of recovery there. I don't concern myself with mom and pops as you put it - they can read the risks and come to their own conclusion. I'm looking into the team a bit further at the moment. I'm trying to be balanced and not swayed by unsupported opinion to be frank.


----------



## MichaelDes

Refer,

What has been the rate of return p.a. of the typical EPRA ETF (Eurozone) - launched I think 2000?  This would give an indication to the Pan European market - generally.


----------



## MugsGame

> I'm looking into the team a bit further at the moment. I'm trying to be balanced and not swayed by unsupported opinion to be frank.


 Refer, is the hearsay I've quoted below just your unsupported opinion? Where can I as an unsophisticated member of the public get the inside track that you seem to have on BI? Are you a groupie on the BI roadshow or something?



> The TV ad is unchanged but looks like this is changing too.





> It seems that it was pressure from Life Offices on IFSRA was the driver.





> the 2007 report has been on the advertised Brendan website since the start and it is the case that attaching it formally to the Prospectus could not have been done... the ISE took over a year to process an application...





> The prospectus can't be altered without the regulators approval and, certainly based on my experience they are very slow on just about everything... It is within the wit of BI to issue an updated prospectus though with the 07 research and separately to publish info on target properties which I suspect will happen.


----------



## Duke of Marmalade

Refer said:


> I would be cautious in suggesting that its promoters are profiteering or its investors misguided.


 
That *would* be an extremely cautious statement especially regards the investors. 

More racy:

"the investors are like sheep" (Shane Ross) 

or better still:

... like poor innocents dancing behind their "Pied Piper" .(Niall Brady).

BTW wasn't the Pied Piper in Germany, is this a huge leg pull after all?


----------



## Brendan Burgess

As this thread is getting longer and longer, I would like to remind readers of the following: 

(a) The only people posting repeatedly and enthusiastically in favour of _Brendan Investments _are newly-registered users Mantus, Refer, converse2007, Riddler and Vanuatu.
 (b) They all seem to have detailed knowledge of _Brendan Investments_, beyond that available to the general public. They have consistently dismissed, fudged or ignored any criticisms levelled at the product itself or the manner of its promotion. They all deny any association with _Brendan Investments _and some of them accuse other posters of having a vested interest in talking it down and/or of defaming Eddie Hobbs in some way.


----------



## Duke of Marmalade

Brendan said:


> The only people posting in favour of _Brendan Investments _are newly-registered users Mantus, Refer, converse2007, Riddler and Vanuatu.


 
Boss, very sympathetic with the thrust of this post. But is it entirely accurate? Fergie who started this thread and, like yourself, does not have the cover of anonymity has stated (somewhere in the press I think) that BI has a role in a diversified portfolio.

I briefly went through that phase as well (but have since reverted to mainstream negativity). I wonder is Fergie still of that view. I'm honestly interested as I respect his independence and experience, as do many journos.


----------



## Brendan Burgess

I must say that I interpreted "has a role in a diversified portfolio" as a euphemism for "avoid". However, I might be wrong. 

I have edited the post slightly so that it is correct. 

Brendan


----------



## Duke of Marmalade

Fergie? Tell us straight. I'm a straight talking gal, I don't appreciate euphemisms, sorry.


----------



## Dman

Hi Folks, 
I'm still one of the undecided when it comes to this product. Intitial I was 100% going to invest as I was looking for something different to invest in as I have a few bob just sitting in a Credit Union account doing nothing. 

But as the weeks have past and all the 'experts' don't seem to be too keen on this product at all. 
However an important point for me is how much are they going to raise? Are they going to raise 50m or as Shane Ross says it's only going to be 10M from Joe public. 

Is there any way for me to find out how much they have currently raised before I invest? I've tired emailing and ringing via the contact details on the site, but no joy with either. 
Anyone else know of a way of finiding out??
Thanks


----------



## gonk

Dman said:


> But as the weeks have past and all the 'experts' don't seem to be too keen on this product at all.


 
I think it is telling that there is a section headed "Press" on the BI website, where presumably it was intended to post copies of the good reviews the product was expected to receive. Instead there's an attempted rebuttal by Vincent Regan, MD of Brendan Investments, of the criticisms that have been raised in the press. Many of the points he makes are, to put it mildly, debatable. For example, here are two comments he makes:

"Investors in Brendan Investments are not levied any entry fees or other up front charges on their initial investment."

"There are costs in establishing Brendan Investments and bringing its offering to the market. However, these costs are capped at 750,000"

Call it an entry fee, up front charge or cost - the fact remains that €750k will be deducted from investors' funds at the outset. In my opinion, Mr Regan is splitting hairs. It is also notable that Mr Regan does not refer at all to the final performance fee of 20% of gains over 8% p.a. which has also been heavily criticised as excessive (not least by me!)

Shortly after the launch they _did_ reproduce on the website an _Evening Herald_ article in which Hobbs was quoted as saying he could quadruple investors' money. This attracted criticism from other papers and it was subsequently removed. Other than this article, any other press coverage I have seen has been at best lukewarm about the investment - much has been negative.



Dman said:


> However an important point for me is how much are they going to raise? Are they going to raise 50m or as Shane Ross says it's only going to be 10M from Joe public.


 
If BI won't tell you, I don't know how else you could find out. In fairness, I don't know how Ross could find out either, so that €10m figure he gave seems to me to be mere speculation on his part. Also, even if BI gave you figures at this stage, they could be misleading. It's quite possible a lot of people are considering their positions and won't make a final decision until just before the 31 October deadline.

Check the prospectus. It says - I think - the intention is to raise anywhere between €10m and €250m. Your guess is as good as mine as to the final amount they will actually raise. (This means the costs mentioned above amount to an effective entry fee of anywhere between 0.3% and 7.5%. If they raise the €50m targetted in the prospectus, it will be 1.5%.)


----------



## IFT

edit...


----------



## Gomahawk

Brendan queries posts but removes my post in GREAT DEBATES in connection with his difficulties with IFSRA. Is it because Brendan's extreme views as expressed in his book like telling investors to avoid property as an investment altogether and put 100% of your cash into the top 10 ISEQ stocks, or his fixation on absolute costs which saw him tell investors to go 100% into the defunct Equitable Life, has finally worn out IFSRA's patience?

Brendan appears to hate property as an investment, its as simple as that. This is a common intolerence shown by people who've never invested abroad and who are enamoured with shares. Brendan believes in the dogma of the super consumer, expecting everybody to attain his level of insight. He castigates commission-paid advice and believes we should all pay fees. He is an extremist. He thinks the BI costs are too high but provides flawed analysis to support it. He ignores or downgrades opposing views. He ignores the higher operating expenses of quoted plc's such as CLS Holdings in the UK with a 1.75% annual charge on gross assets for an equivalent size business ie €1bn. Brendan argues a dogma.

Shane Ross was clearly irked by the destruction of his initial article by Hobbs on the radio. Last week he focused on costs which is a joke given his directorship of hedge funds with substantially higher costs, with leveraging and with derivatives that he castigates in his column. He is not credible.

The BI helpline is working, as is the website and contrary to the thrust of the criticism here many commentators have been positive albeit labelling the syndicate as medium to high risk.


----------



## ubiquitous

Gomahawk said:


> Brendan queries posts but removes my post in GREAT DEBATES in connection with his difficulties with IFSRA.


not true...
http://www.askaboutmoney.com/showthread.php?t=65277

Otherwise, please refrain from personal attacks on other posters, as per the posting guidelines. 

You might please also note the following



MugsGame said:


> Brendan is one of the few people who posts in his own name on Askaboutmoney. That should be respected. I know he does not discuss Consumer Panel business in public other than when they issue their annual report.
> 
> I don't think it's appropriate to use AAM to ask him to comment on something which he is clearly not prepared to discuss in public.


----------



## Gomahawk

It would be intolerable for the chairman to discuss the Panel's business in public as it would be for Brendan to use his position as chairman to go on solo runs with IFSRA pursuing his own agenda.


----------



## gonk

Gomahawk said:


> He thinks the BI costs are too high but provides flawed analysis to support it. He ignores or downgrades opposing views. He ignores the higher operating expenses of quoted plc's such as CLS Holdings in the UK with a 1.75% annual charge on gross assets for an equivalent size business ie €1bn.


 
The above comparison with CLS Holdings is equally flawed. Firstly, CLS has no equivalent to Brendan Investment's final performance fee and secondly, CLS Holdings is, as you point out, a _quoted _plc, meaning investors can sell their shares at any time and are not tied in for up to 10 years.


----------



## Gomahawk

Wrong. The charge of 1.75% pa is 75% more than BI and is yearly. The BI performance bonus is at the back end and requires a hurdle of 8% pa. The CLS 0.75% is purely admin and there is likely to be additional mgt costs. Typically there will be share options and / or bonuses for performance. It would be most unusual if the mgt team was not incentivised.

Life offices have briefed staff that BI is good value. It is seen as a threat to existing players and has triggered an intensive campaign of lobbying media. It has spilled over here too with pure rejectionism from several industry posters.

BI is on the way to a big success and is breaking the mould an event that is never welcomed by the status quo here. Its charges, its strategy, its team have stood up. It will have a grey market for shares after its first trading period much like Airtricity through Davys. No matter hard you try to demolish BI's proposition it will bounce back.


----------



## ClubMan

Oh gawd - not yet another cheerleader for _BI _or is it the same one registering over and over again...


----------



## gonk

Gomahawk said:


> The BI performance bonus is at the back end and requires a hurdle of 8% pa.


 
So what? It'll still come out of the investors' returns and if BI's management can't get a return in excess of 8% p.a. on this type of investment, they have no business being involved in it in the first place. The hurdle of 8% is extremely undemanding and the bonus rate of 20% is excessive.



Gomahawk said:


> It would be most unusual if the mgt team was not incentivised.


 
I don't have any problem with that in principle. I do say the proposed bonus structure will begin rewarding BI's management at what would be at best mediocre levels of return and at a very high rate into the bargain. No other geared property investment on the Irish market has a bonus structure which rewards managers so well.

And I think it's worth pointing out again, the bonus is paid not to the fund managers but to the owners of the "Founder Shares". At present, these are one and the same, but there is nothing to stop the owners of these shares withdrawing from active participation in the company and yet still receive any final bonus which falls due. 



Gomahawk said:


> It will have a grey market for shares after its first trading period much like Airtricity through Davys.


 
The prosectus and brochure say there _may_ be a grey market. This is by no means guaranteed and would in any case not be as liquid as a full listing on the stock exchange.


----------



## LDFerguson

Harchibald said:


> Fergie? Tell us straight. I'm a straight talking gal, I don't appreciate euphemisms, sorry.


 
Gee Harchibald, you're bringing me back - I haven't been known as Fergie since I was at school and that was back in the days of hedge schools...it makes a refreshing change from everyone calling me "Sir" or "Your Lordship". 

I genuinely started this thread five weeks ago with an open mind. I believed then and I believe now that European Commercial Property has a place in a diversified portfolio. And that's not a euphemism, Brendan. If I'm constructing a portfolio today for a client with a long-term view, European Commercial Property will be in there in my recommendations.

That said, I've gone off BI since this thread started, driven in part but not entirely by some of the analysis in this thread and elsewhere. I'm not going to rehash the arguments already made. But a quick (and not exhaustive) sample would include (1) the fact that the property pickers detail their involvement in the property business on the website and brochure, but apparently only tell prospects of their track record of _making money_ on such projects at the roadshows. Why? (2) The fact that there's such a wide range of possible fund sizes (between €200M and €1B) could potentially leave a small team scrambling around trying to find good properties while the investors' money lies in cash, (3) Notwithstanding (2), apparently there is a pipeline of properties already going under the ruler, but apparently you only get details of this at the roadshows also. Why? 

In general, I also dislike that a high-risk investment is being heavily *mass-marketed* with no financial advice and a low entry threshold of €5,000.

Here's a few other random comments: - 

The charges on the investment are undeniably hefty and the threshold for payment of bonuses low. So a geared property investment vehicle has chunky charges? Not news. But Eddie Hobbs promoting an investment with substantial charges is news given that he himself very publically advocated low charges in the past.  I'm reminded of when it was revealed that Chris De Burgh had been getting jiggy with his nanny. The fact that a musician had been unfaithful to his wife wasn't exactly new. But the fact that it was Chris De Burgh who previously had been regaling all and sundry about how delicious his wife was that he simply had to inflict the song Lady in Red on the world - _that_ was the story.
The promoters stand to make big money if BI succeeds to raise enough funds to get of the ground. They'll make even bigger money if it does well. That's free trade. They have not been dishonest about it. If you don't like it, don't invest or go and set up your own fund.
I'm long enough in this business and have seen plenty of new initiatives arrive on the scene over the years. Some have succeeded, some have failed. My point is that I personally am not remotely threatened by the appearance of BI, in case anyone thought my opinions might be coloured by self-interest.
There have been lots of posts in this thread from anonymous posters. Some of them may have agendas, some may be simply interested. Those in the financial services industry are easy to spot. But there's only one poster who, from reading his/her posts, I strongly suspect has a connection with BI, but who attempts to claim that they're just a consumer. I can't prove this suspicion. I'm not going to bother to try. But if I'm right, I'll say this to the person concerned (you know who you are) - if you have to resort to such pathetic efforts to support your arguments, you must be desperate.


----------



## LDFerguson

> Life offices have briefed staff that BI is good value. It is seen as a threat to existing players and has triggered an intensive campaign of lobbying media.


 


> BI is on the way to a big success and is breaking the mould an event that is never welcomed by the status quo here. Its charges, its strategy, its team have stood up.


 
Don't ya just love unsubstantiated rumour-mongering on an internet board? 

Oh what the hell - I might as well join in. I hear from well-placed industry sources that Brendan Burgess, Michael Fingleton and Lord Lucan have joined forces and are mounting a take-over bid for Irish Nationwide, EBS and Royal Liver.  Senior management at AIB are concerned, I'm told - this is going to shake up the industry.


----------



## Sunny

LDFerguson said:


> I hear from well-placed industry sources that Brendan Burgess, Michael Fingleton and Lord Lucan have joined forces and are mounting a take-over bid for Irish Nationwide, EBS and Royal Liver. Senior management at AIB are concerned, I'm told - this is going to shake up the industry.


 
I heard that as well.


----------



## Duke of Marmalade

Gomahawk said:


> Its charges...have stood up.


 
You bet. 

As to this grey market - they will regret that promise - it will bring the chickens home to roost v. quickly.

This one is not goin' to go away. Rattling the Senator's cage was also a bad mistake. I guess the Senator will be watching this grey market very closely indeed.

Thanks Sir Fergie for responding to me. BTW the range is 40M to 1BN. Far, far too wide for the promoters to argue that they are equally prepared for any scenario.


----------



## McVittie

People are entitled to their good name and this entitlement is protected by law. 

In my opinion the contents of some posts contain innuendo bordering on defamation. Such innuendo is not something that should be tolerated in any public forum. Regrettably it is being tolerated in this thread and an associated thread.

The owner of this site should publish clear unambiguous guidelines for posters and ensure effective compliance.


----------



## Sunny

converse2007 said:


> People are entitled to their good name and this entitlement is protected by law.
> 
> In my opinion the contents of some posts contain innuendo bordering on defamation. Such innuendo is not something that should be tolerated in any public forum. Regrettably it is being tolerated in this thread and an associated thread.
> 
> The owner of this site should publish clear unambiguous guidelines for posters and ensure effective compliance.


 
Doesn't the name Converse2007 actually have to exist before it can be a victim of defamation. Not having a go by the way. Just wondering.


----------



## Brendan Burgess

As this thread is getting longer and longer, I would like to remind readers of the following: 

(a) The only people posting repeatedly and enthusiastically in favour of _Brendan Investments _are newly-registered users Mantus, Refer, converse2007, Riddler and Vanuatu. And now gomahawk seems to have joined in as well. 
(b) They all seem to have detailed knowledge of _Brendan Investments_, beyond that available to the general public. They have consistently dismissed, fudged or ignored any criticisms levelled at the product itself or the manner of its promotion. They all deny any association with _Brendan Investments _and some of them accuse other posters of having a vested interest in talking it down and/or of defaming Eddie Hobbs in some way.


----------



## Duke of Marmalade

converse2007 said:


> In my opinion the contents of some posts contain innuendo bordering on defamation.


 
I have to agree.  The anti lobby have by and large concentrated on the facts, since these provide more than ample fodder to make the case.

The Hydra which supports BI, on the other hand, is unable to counter the objective arguments with like but reverts to personalised attacks accusing hidden agendas, innuendo, defamation etc.


----------



## DrMoriarty

Mantus said:


> No doubt now I'll be banned for exposing the glaring weakness of AAM. To be frank I really couldn't care less if a bunch of anonymous people want to engage in this type of so-called analysis. My only concern is that some inexperienced or lazy journalist might mistake much of the material as real analysis and quote "expert sources within the industry" rather than "the same nameless cranks over and over again on a website with nothing better to do most of the time, some of whom lead such sad existences they've posted tens of thousands of times". Am I banned now?





Mantus said:


> You can take your case to open public debate and out of this cesspit any time you like. You can also go to the Regulator again, although I suspect your credibility runs short there.
> 
> If you believe that there is mis-selling say so now. Charge the directors of this company now and be prepared to defend yourself for doing so. In other words Brendan put up or shut up.





Mantus said:


> AAM is anonymous, open to competitive undermining and is badly slanted. Much of it, except for simple stuff like mortgages, deposits etc is plainly wrong, posted by a narrow group of opinionated website junkies...


Is this the kind of innuendo you mean, Ma Converse2007? I'll grant you it breaks several of the posting guidelines...


----------



## LDFerguson

> Brendan queries posts but removes my post in GREAT DEBATES in connection with his difficulties with IFSRA. Is it because Brendan's extreme views as expressed in his book like telling investors to avoid property as an investment altogether and put 100% of your cash into the top 10 ISEQ stocks, or his fixation on absolute costs which saw him tell investors to go 100% into the defunct Equitable Life, has finally worn out IFSRA's patience?


 
Or maybe Converse2007 is referring to this?


----------



## McVittie

A few definitions that may be useful :

"An *innuendo* is a defamatory imputation whereby the facts known to the reader import into the words some secondary meaning as an addition to, or alteration of, their ordinary meaning."

_"__*Defamation*__ is committed by the wrongful publication of a false statement about a person which tends to lower that person in the eyes of right-thinking members of society or tends to hold that person up to hatred, ridicule or contempt or causes that person to be shunned or avoided by right-thinking members of society.__"_

The again Dr M you may know of these already ?


----------



## DrMoriarty

Indeed. 


converse2007 said:


> I was interested in surfacing the hidden motivations behind the text.


----------



## Gomahawk

It is said that those posting positively about BI are fudging, but fudging what? So far there has been no fudge. This is simply untrue. Each of the criticism raised has been been outweighed by counter argument and much of it has been seen to be wrong.

1. First there was the argument that 1% pa was high, but no proper benchmark was used. Instead critics relied initially on the Augustus fund which has a background take out up front of over 11% of the capital raised - that failed obviously. 

2. Then in the great anti-property preachers summary, Brendan relied upon an ungeared Hibernian Life fund and pooh poohed criticism that this was false. Finally the truth emerged when its geared European Residential fund was found to have much higher annual charges than BI.

3. Some critics have resorted to mathematical summersaults like magnifying the 1% pa of the gross asset value four fold by reversing the gearing. This is mathematically accurate but absurd. By that measure the upfront costs and annual running costs of a residential investment unit bought with 100% debt is infinity. A 10% equity means that common folk should refer to stamp duty at 90% and annual running costs for ESB, Insurance, Maintenance and rent management at, probaby 70% to 90% of equity. 

4. Criticism of costs has been conducted in a vacuum. Nobody has suggested what the costs should be if there is no commission upfront. When the acid test of quoted PLC costs with examples given where annual costs are at least 75% higher, this is dismissed as invalid.

5. The 20% profit share above 8% is attacked as unprecedented but when other examples are given like the Bank of Ire Newgrange Fund with a hurdle of 7% pa, 3% upfront and annual costs of 1.5% this is also dismissed.

6.BI is attacked for not having "household names", despite the fact that three of its directors have over €1.6 bn of property projects under their belts and are qualified individuals. The facts are that, other than politically active developers and tax evaders, few highly experienced property experts are household names. It is a circular argument as a piece of criticism.

7. There isn't definitive properties identified is another criticism, but BI has stated that its is in due diligence on over €100 m of German property and is joining a JV on a five star hotel and 160 appartments in an F1 track and technology park in the Algarve.

8. Media critics like Ross has completely written off property including in Germany stating that " the property game is over" while also stating that "we know little about continental property".

That last comment sums up much of the criticism on this thread, ill-informed, inaccurate and misleading. If it hadn't been for the counterpoints people reading this thread could assume that you actually knew something about the operating costs of a property plc or property itself. Finally on the question of identity, let the nameless industry critics reveal themselves and so will I, until then you'll just have to put up with your arguments being challenged and found erroneous.


----------



## Duke of Marmalade

Gomahawk said:


> 3. By that measure the upfront costs and annual running costs of a residential investment unit bought with 100% debt is infinity. A 10% equity means that common folk should refer to stamp duty at 90% and annual running costs for ESB, Insurance, Maintenance and rent management at, probaby 70% to 90% of equity.


 
I have been waiting the chance to prove the absolutely absurdity of this argument. But first I note that Himself has used this argument in the press - He surely knows its absurdity, but has got at least one journo to buy.

Next sighting is in this thread by Riddler who states that he is a close friend of Himself.

Now this new manifestation of the Hydra tries it again.

I presume the putative example is of a person buying a house for, say, 1M with a 910K mortgage, paying 90K stamp duty.

Let's ask a few questions:

Buyer, how much will that house cost you? Answer: 1M plus interest on my mortgage, certainly not 90K.

Buyer, why are you paying that much? Answer: because I am going to enjoy living in that house, it is worth 1M to me.

Estate agent (who also arranged the mortgage), how much did you charge the buyer? Answer 1M, no way is he going to argue that he got the buyer a 1M house for 90K.

The key thing is the buyer is consuming 1M worth of goods with the assistance of a mortgage. The mortgage is purely a cash flow facilitator. 

The ridiculous comparison of this situation with geared property investment is a dishonest fudge of the highest order. Sorry, let me retract, it is just possible that those making this comparison actually believe it - though I don't know which is the worst defamation "fudge" or "stupidity"?


----------



## LDFerguson

I do like Harchibald's reference to the pro-BI crowd as The Hydra, so I'm going to borrow it here.  



> 2. Then in the great anti-property preachers summary, Brendan relied upon an ungeared Hibernian Life fund and pooh poohed criticism that this was false. Finally the truth emerged when its geared European Residential fund was found to have much higher annual charges than BI.


 
BB's summary referred to the Hibernian Commercial Property Fund.  The Hydra countered with the Residential Fund.  When this was clarified, Hydra opined that comparison of a geared and an ungeared fund was invalid, but later used comparisons with hedge funds and the Newgrange fund which has a minimum investment of millions.  Talk about invalid comparisons!



> 3. Some critics have resorted to mathematical summersaults like magnifying the 1% pa of the gross asset value four fold by reversing the gearing. This is mathematically accurate but absurd. By that measure the upfront costs and annual running costs of a residential investment unit bought with 100% debt is infinity. A 10% equity means that common folk should refer to stamp duty at 90% and annual running costs for ESB, Insurance, Maintenance and rent management at, probaby 70% to 90% of equity.


 
If I invest €100,000 and the promoters take €4,000 per year, that's 4% of invested funds.  Since when is that a mathematical somersault?  



> Nobody has suggested what the costs should be if there is no commission upfront.


 
The "no commission upfront" argument is a red herring.  Commission pays for financial advice.  There's no financial advice with this product.   



> 5. The 20% profit share above 8% is attacked as unprecedented but when other examples are given like the Bank of Ire Newgrange Fund with a hurdle of 7% pa, 3% upfront and annual costs of 1.5% this is also dismissed.


 
Gonk has already blown this argument away earlier.  A concentrated equity fund with a €5 million minimum investment.  Did someone say "invalid comparison"?



> 6.BI is attacked for not having "household names", despite the fact that three of its directors have over €1.6 bn of property projects under their belts and are qualified individuals. The facts are that, other than politically active developers and tax evaders, few highly experienced property experts are household names. It is a circular argument as a piece of criticism.


 
Who asked for household names?  What I'm curious about is why BI is so keen on publicising the size of projects that the founders have been involved with, but doesn't publish details of what their track record of actually making money on projects has been.  The Hydra said that this information is given out at the roadshows.  Why not on the website?  



> 7. There isn't definitive properties identified is another criticism, but BI has stated that its is in due diligence on over €100 m of German property and is joining a JV on a five star hotel and 160 appartments in an F1 track and technology park in the Algarve.


 
Again, why can't I find this very pertinent information on the website?  

What happens if the fund raises €250M and gears up on that?  



> Finally on the question of identity, let the nameless industry critics reveal themselves and so will I, until then you'll just have to put up with your arguments being challenged and found erroneous.


 
I have no interest in identifying posters who choose anonymity.  But if, for example, a hypothetical anonymous poster was claiming to be nothing more than an investor when s/he really was connected with the investment vehicle s/he was praising, that would be pathetic and would smack of desperation.  Would you agree?


----------



## MichaelDes

This thread is beginning to remind me of [broken link removed] it's circular and boring at this stage.


----------



## gonk

Gomahawk said:


> 1. First there was the argument that 1% pa was high, but no proper benchmark was used. Instead critics relied initially on the Augustus fund which has a background take out up front of over 11% of the capital raised - that failed obviously.


 
Gomahawk/Mantus/Converse2007/Refer already knows this very well, but I'll repeat for the benefit of new readers who don't have time to trawl through the entire thread.

The 11% of capital referred to above includes costs which BI will also incur, but can't quantify because it has no detailed project plans far enough advanced to provide any written information on. These costs include things like stamp duty (this alone is 3.5%), legal costs, and fees for professional advice.

The only reason Gomahawk is able to make this wholly spurious point is because Augusta, unlike BI, actually has a plan which it has put in writing for prospective investors, including all costs.

BI has acknowledged in its prospectus it will incur similar costs but hasn't given any estimate for the total amount.


----------



## LDFerguson

And so within two hours 7 out of 8 of Gomahawk's arguments have been taken apart, and the 8th could only be answered by Shane Ross.


----------



## gonk

gonk said:


> I think it is telling that there is a section headed "Press" on the BI website, where presumably it was intended to post copies of the good reviews the product was expected to receive.
> 
> .....
> 
> Shortly after the launch they _did_ reproduce on the website an _Evening Herald_ article in which Hobbs was quoted as saying he could quadruple investors' money. This attracted criticism from other papers and it was subsequently removed. Other than this article, any other press coverage I have seen has been at best lukewarm about the investment - much has been negative.


 
I notice there _are _now a few press articles reproduced on the website since I wrote the above this morning.

Rather laughably, one is this interview with Vincent Regan in the _Sunday Business Post _of 30 September. 

[broken link removed]

It contains no analysis, just a Q&A with Mr Regan who puts his point of view - fair enough, as far as it goes. But surprise, surprise, this article in the same issue of the _Business Post_ is not reproduced:

[broken link removed]

It's an analysis by specialist property investment writer Diarmaid Condon, which includes comments such as: 

"There have been almost 3,000 downloads of the application form on its own, which would suggest that large numbers intend to invest without reading the prospectus.

This is added to concerns that the low entry level for the scheme would attract investors who really shouldn’t, and probably couldn’t, consider such investments under normal circumstances."

and:

"There is also a performance bonus payment , which amounts to 20 per cent of any gains in excess of 8 per cent growth in the fund per annum.

This charge looks somewhat high, considering that most top quality syndicates work off a base of around 15 per cent - although some property funds do levy a charge on gains as low as 7 per cent."

finally concluding:

"Brendan Burgess of the financial forum AskAboutMoney.com is not a proponent of the product. He feels that the claims of potential profits being made are excessive.

He also feels that the charges are excessive, and that the risk level is very high for such low level investors. The option to borrow in Ireland to invest in an already highly-geared company has also come in for some criticism from Burgess."

As for the lukewarm reception in other press coverage, I see another piece reproduced is a review by Jane Suiter in the Sindo, which gives the product a bare pass, scoring it 5 out of 10. BI must be desperate!


----------



## gonk

LDFerguson said:


> I genuinely started this thread five weeks ago with an open mind. I believed then and I believe now that European Commercial Property has a place in a diversified portfolio. And that's not a euphemism, Brendan. If I'm constructing a portfolio today for a client with a long-term view, European Commercial Property will be in there in my recommendations.
> 
> That said, I've gone off BI since this thread started


 
In case you don't know Liam, in one of the press articles reproduced on the BI website, from the _Sunday Tribune_, you are quoted as endorsing the investment:

'Adviser Liam Ferguson (www. ferga. com) would also recommend it "as part of a diversified portfolio. . .The management team are experienced property investment professionals and the prospects for property in the regions they propose to invest in (Germany, the UK and Portugal) are generally considered to be good.'

[broken link removed]


----------



## LDFerguson

LDFerguson said:


> That said, I've gone off BI since this thread started, driven in part but not entirely by some of the analysis in this thread and elsewhere.


 
Thanks for pointing out the link Gonk.


----------



## Gomahawk

The facts I've raised have not been countered at all by the above. You still can't get passed the quoted PLC higher cost issue, the sales commission kick back and bank arrangement fee kickback in the Augusta fund and that BB is a serial property hater - clear from his thome.

The final irony is that Liam Ferguson afaik is not authorised by IFSRA to give advice on shares in a plc and neither, presumably, are any of the critics here. Liam is a restricted intermediary, that means, generally limited advice on life office products. Gonk is an industry person with a strong link to Augusta but I'm presuming he too does not have the IFRSA license or competance recognition to advise. BB is similar and is not authorised. Archibald has engaged in defamation already and has been edited and seems to have a particular bug about at least one of the promoters.

A sorry lot imho to be dishing out "advice" when none of you are actually authorised and, by extension recognised as having the competance to do so.


----------



## ClubMan

Gomahawk said:


> is not authorised by IFSRA to give advice on


While [broken link removed] not authorised/regulated by _IFSRA _at all?


> *Prospective investors should note that Brendan Investments Pan European Property plc (trading as Brendan Investments) is not regulated by the Financial Regulator or the Irish Stock Exchange.*


----------



## ubiquitous

Gomahawk said:


> ... is not authorised by IFSRA to give advice on ....






> *Askaboutmoney is a discussion forum. The contributors may or may not be qualified or authorised to offer advice.*
> 
> We make every effort to correct misleading information and to give a balanced variety of opinions.
> 
> We accept no liability for any loss arising from action taken on the basis of information on the site.
> 
> Before making a financial decision, you should independently verify any information you have got from the site.
> 
> For complex financial or tax decisions, you should consult a professional advisor who will take into account all the necessary personal circumstances of your case


----------



## Sunny

Gomahawk said:


> The facts I've raised have not been countered at all by the above. You still can't get passed the quoted PLC higher cost issue, the sales commission kick back and bank arrangement fee kickback in the Augusta fund and that BB is a serial property hater - clear from his thome.
> 
> The final irony is that Liam Ferguson afaik is not authorised by IFSRA to give advice on shares in a plc and neither, presumably, are any of the critics here. Liam is a restricted intermediary, that means, generally limited advice on life office products. Gonk is an industry person with a strong link to Augusta but I'm presuming he too does not have the IFRSA license or competance recognition to advise. BB is similar and is not authorised. Archibald has engaged in defamation already and has been edited and seems to have a particular bug about at least one of the promoters.
> 
> A sorry lot imho to be dishing out "advice" when none of you are actually authorised and, by extension recognised as having the competance to do so.


 
The same can be said about the people posting heavily in favour of the product. What are their interests and qualifications? At least Liam and Brendan have the decency to post using his own names and I never thought they were giving advice in their professional capacities. The promoter himself has admitted posting on this site using an assumed name which he is quiet entitled to do but in my opinion is bad practice. Let Brendan Investements come on to this thread openly and refute all the arguments instead of hiding in the background making snide remarks about anyone that doesn't agree with them or come on and deny that they have been posting at all.

This thread is getting boring though. I won't be investing as I don't agree with their outlook on commercial property and I am not handing over 20% of the upside over such a low hurdle. I also don't agree with the involvement of Eddie Hobbs and the mass marketing. Its as simple as that.


----------



## gonk

Gomahawk said:


> Gonk is an industry person with a strong link to Augusta but I'm presuming he too does not have the IFRSA license or competance recognition to advise.


 
I have already stated and I repeat now I am not in any way connected with the financial services industry. And, as I have also already stated, my only connection to Augusta is my investment in one of their previous funds. I don't appreciate being called a liar by someone who's bellyaching about defamation. I doubt Augusta would appreciate the implications of your comment for them either.

Anyone who wants can look back over my posts on this site on a wide variety of topics since the start of the year and consider whether they think they are really a part of a clever plan to create a cover story for myself before I began a hatchet job on BI.

I am not advising anyone to invest or not invest in BI, Augusta or anything else. I have just given my opinion, for what it's worth, and pointed out some facts which some other posters would prefer not to have highlighted.


----------



## LDFerguson

> The final irony is that Liam Ferguson afaik is not authorised by IFSRA to give advice on shares in a plc...


 
Well done Gomahawk - you're absolutely right for a change.  I'm not authorised by IFSRA to give advice on shares in a plc.  That's why I put the following into my very first post in this thread.  



> P.S. - As a Multi Agency Intermediary, I don't have an agency to sell this product so views epressed in this thread are personal.


----------



## Duke of Marmalade

Gomahawk said:


> Archibald has engaged in defamation already.


 
Gom, *that* is defamation. 

A general thought occurs to me.  Many of the opinions in this thread are quite passionate.  I can understand a variety of reasons why people in the anti camp would be that way.  The infinitely more intense personalised reactions of the Hydra camp as in the above quote cannot be simply due to their independent professional assessment of the merits of BI.


----------



## Sunny

Harchibald said:


> A general thought occurs to me. Many of the opinions in this thread are quite passionate. I can understand a variety of reasons why people in the anti camp would be that way. The infinitely more intense personalised reactions of the Hydra camp as in the above quote cannot be simply due to their independent professional assessment of the merits of BI.


 
I thinking exactly the same thing.


----------



## LDFerguson

> A sorry lot imho to be dishing out "advice" when none of you are actually authorised and, by extension recognised as having the competance to do so.


 
Come now Gomahawk, you're really grasping here.  You know very well that most firms, including my own, chose which regulatory status to apply for based on the commercial realities which applied to them.  

If an MAI firm chose not to apply for AA or other status for commercial reasons, it's ludicrous to try to imply that it had anything to do with competence.  

That line in reasoning is so old it's dull as ditch-water.  Many people, including one representative body tried to peddle the nonsense that AA status automatically denotes superior advice, but they had to change their tune.


----------



## F. Kruger

Could someone just kill this thread?


----------



## kaplan

LDFerguson said:


> I genuinely started this thread five weeks ago with an open mind. I believed then and I believe now that European Commercial Property has a place in a diversified portfolio.....That said, I've gone off BI since this thread started, driven in part but not entirely by some of the analysis in this thread and elsewhere.


 
What would you now do if three weeks ago you advised someone to invest in Brendan (authorisation aside) ?

For others : Could Riddler have hit the nail on the head weeks ago: 
"One of the more interesting aspects of Brendan Investments is the disintermediation of the intermediary. It may well prove a test of investor maturity. Could this be at the heart of some of the "concerns" being expressed ?"

Kaplan


----------



## Duke of Marmalade

kaplan said:


> For others : Could Riddler have hit the nail on the head weeks ago:
> "One of the more interesting aspects of Brendan Investments is the disintermediation of the intermediary. It may well prove a test of investor maturity. Could this be at the heart of some of the "concerns" being expressed ?"
> 
> Kaplan


 
Oh Jayz, this Hydra is outa control!


----------



## kaplan

Harchibald

I have no part in the mythical Hydra you refer to nor am I party to the Garradrimna Junior B hurling team and their hurlers on the ditch. Kruger is absolutley right in his request...it's high time Garradrimna residents got off their bar stools and went home.

Kaplan


----------



## catherined61

Mantus said:


> Gonk, the Sunday Times speculation is wrong. Riddler's last post was 11.02 pm Friday sept 7th at which point Hobbs was on the Late late Show. Riddler was somebody else obvious from the writing style. The irony is that jounalists and, concious of the rules about naming, also post here under monikers including on this thread and based at the Sunday Times.
> 
> Some hacks use AAM to drum up stories and, occassionally, when short of ideas resort to quoting nameless sources from AAM.


 

I have just read the whole thread and I'm in no doubt that someone else had riddler's password - you do not fool me !

It is also obvious that people connected with BI have been posting but why would they bother ? Why would EH care what posters on AAM are saying ? The longer this thread goes on the more damage that will be done to their business.

What will happen to investors money if insufficient funds are raised ?

Close this thread.


----------



## ClubMan

returns this thread near the top of the list.


----------



## Sherpa

Yeah - I'd say that the advocates of BI probably regret getting involved with 





> "the same nameless cranks ... on a website with nothing better to do most of the time, some of whom lead such sad existences they've posted tens of thousands of times"


 
After all, if they hadn't risen to the bait, the thread would probably have died out after a couple of posts.  Instead it now ranks 2nd on Google, only preceded by the BI website itself.


----------



## LDFerguson

> What would you now do if three weeks ago you advised someone to invest in Brendan (authorisation aside) ?


 
That's the whole point.  As I don't have authorisation to sell this product or give advice on it in a professional capacity, as I stated in the very first post on this thread, the views I have expressed are purely personal.  

Because I can't professionally advise anyone to invest in this product, I'm free to learn about it as I go along, through the media and Askaboutmoney, just like any other consumer.


----------



## Duke of Marmalade

kaplan said:


> Harchibald
> 
> I have no part in the mythical Hydra you refer to nor am I party to the Garradrimna Junior B hurling team and their hurlers on the ditch. Kruger is absolutley right in his request...it's high time Garradrimna residents got off their bar stools and went home.
> 
> Kaplan


Jayz, Kap, I don't understand any of that, but I accept your bona fides that you are separate from the Hydra. Very sad.


----------



## McVittie

converse2007 said:


> People are entitled to their good name and this entitlement is protected by law. In my opinion the contents of some posts contain innuendo bordering on defamation. Such innuendo is not something that should be tolerated in any public forum. Regrettably it is being tolerated in this thread and an associated thread. The owner of this site should publish clear unambiguous guidelines for posters and ensure effective compliance.


 
I note there has been no response to this suggestion.


----------



## Sherpa

> People are entitled to their good name and this entitlement is protected by law...


 
Indeed they are converse2007, indeed they are.  And may I say that your name is more than just good.  In fact it's great.  By the way, I knew your father converse1933 well.  He'd be very proud.


----------



## Gomahawk

Ok close the thread then if you are tired of it all but I'll keep an eye for any future uninformed posts from unqualified people dressed up as "advice". I'll also keep an eye out for any further attempts at defamation how about that. Slan


----------



## DrMoriarty

Gomahawk said:


> I'll also keep an eye out for any further attempts at defamation how about that.


Hint.


----------



## ClubMan

Or how about...  


Gomahawk said:


> Is it because Brendan's extreme views as expressed in his book like telling investors to avoid property as an investment altogether and put 100% of your cash into the top 10 ISEQ stocks, or his fixation on absolute costs which saw him tell investors to go 100% into the defunct Equitable Life, has finally worn out IFSRA's patience? ... He is an extremist.
> 
> ...
> 
> Shane Ross ...  He is not credible.


----------



## kaplan

Harchibald

I see you're still on your stool and joined by a few Garradimna Junior B team supporters, looking for after hours.

Thing is the proprietor seems to have gone for walk. He's left his dogs behind cos' you can hear them barking in the yard.

Time methinks for you to drink up and hack your way home.

Kaplan


----------



## ubiquitous

F. Kruger said:


> Could someone just kill this thread?



Please do NOT close this thread. Simply because there are (newly-arrived) forces here that have been trying to sabotage it and whose objective, I suspect, is to drag it down to a level where the mods have no alternative but to close it. Perhaps a move to LOS might be more in order, if some drastic action is unavoidable



> Originally Posted by Mantus  View Post
> Gonk, the Sunday Times speculation is wrong. Riddler's last post was 11.02 pm Friday sept 7th at which point Hobbs was on the Late late Show.



Do bear in mind that the times recorded for AAM posts are sometimes an hour wrong, ie a post made at 1pm can show up as 12 noon.


----------



## Duke of Marmalade

kaplan said:


> Harchibald
> 
> I see you're still on your stool and joined by a few Garradimna Junior B team supporters, looking for after hours.
> 
> Thing is the proprietor seems to have gone for walk. He's left his dogs behind cos' you can hear them barking in the yard.
> 
> Time methinks for you to drink up and hack your way home.
> 
> Kaplan


Billy me boy, still don't understand a word of that.


----------



## F. Kruger

F. Kruger said:


> Could someone just kill this thread?


 
Just to clarify. 

Clearly, emotion has overtaken reason and logic as the last couple of pages of this thread would suggest. You need a balance and some sort of compromise from both camps to resolve an issue. It would appear that this is not going to happen here.

Tempers are raised and both sides are upset. It aint healthy and it is certainly not entertaining. 

Let It Go!!!!!!!!!! (and enjoy your weekend)


----------



## ClubMan

ubiquitous said:


> Do bear in mind that the times recorded for AAM posts are sometimes an hour wrong, ie a post made at 1pm can show up as 12 noon.


As far as I know that should only happen if you have not configured your personal _User CP (Control Panel) _time settings correctly to account for daylight saving.


----------



## ubiquitous

That's odd My User CP setting for this appears to be "automatically detect DST changes"


----------



## ClubMan

ubiquitous said:


> That's odd My User CP setting for this appears to be "automatically detect DST changes"


And is the timezone set to _GMT_? Not sure if it matters but are your local _PC_ time, timezone and _DST _settings correct? My _vBulletin User CP _settings are _GMT _and _Automatically detect DST settings _and the time always appears correctly on posts.


----------



## bungaloid

F. Kruger said:


> Just to clarify.
> 
> Clearly, emotion has overtaken reason and logic as the last couple of pages of this thread would suggest. You need a balance and some sort of compromise from both camps to resolve an issue. It would appear that this is not going to happen here.
> 
> Tempers are raised and both sides are upset. It aint healthy and it is certainly not entertaining.
> 
> Let It Go!!!!!!!!!! (and enjoy your weekend)



Yes, "the dinosaurs are eating each other", whether that is entertaining or not is subjective.

As a genuine ordinary investor with no vested interest in either side of this ill tempered debate, I would like to offer a balanced summary of the two sides. I am completely unqualified to offer financial advice, but my freedom of speech is regulated by the constitution.

BI claim they have a mould-breaking product, offering timely access to the european property market to the great unwashed at a reasonable cost. Vested interests are attempting to sabotage this new source of competition for funds.

Skeptics argue that BI encourage personal borrowing to invest in an already leveraged product, with high and uncertain costs, high levels of risk, with vague promises of excessive returns. Liquidity will only be available (for ten years) in a grey market which may never materialise. Excellent liquidity is available through exchange traded funds and publicly quoted companies at lower or similar costs and similar or better risk/reward profile.

Does BI have a better risk/reward than a rental apartment in bulgaria? Almost certainly, yes.

Would I personally invest in BI? No.


----------



## ClubMan

Maybe those who are not interested in the thread should just ignore it it rather than looking for it to be closed? That's what I do most of the time since it's not high on my priority list of subjects to read about. As ever, if people have problems with specific posts then use the _Report Post_  option to alert the moderators.


----------



## alser2

i asked around and as far as i know the name refers to st. brendan the navigator who founded newfoundland i think it was. that mad me have a look at the website and in particular i found the press section very interesting. one of the directors has answered a lot of the challenges that have been put forward, so its worth a look.


----------



## medici

Bungaloid thankfully it was nice to see some independent commentary rather than the sniping that has gone before.

The only bit of advise I give to people in these circumstances is to read the prospectus in detail - it is quite an informative document. Know what you are investing in and ask and take advise from people you trust. To me there seems to be far too much lobbying going on from both sides in this one to get any sort of informed opinion on the product

Personally I have invested in residential property in France but will not make this mistake again. The hassle factor and paper work is far too great regardless of the return. I have invested in other geared syndicated products and they have worked out well and looking at the fees in this case they seem reasonable particularly as there are no upfront fees and therefore all of your investment gets invested from day one. 

Anyhow thats my bit for now - I'll be back to see if the lobbyist are back later - however just for a bit of entertainment though!!


----------



## ClubMan

alser2 said:


> one of the directors has answered a lot of the challenges that have been put forward, so its worth a look.


Have you read the rest of this thread to see other challenges and rebuttals? What do you think of them?


----------



## alser2

to be honest i think people should read the prospectus and the supplementary one as i have been on the website, with every investment there are pros and cons and people go for different types of investment. i dont think these brendan guys claim to have found 'an investment for all' solution, but it appears to be promising for those who go for a long term investment. like a yearly budget it wont be for everyone.


----------



## ClubMan

You mean you haven't read this thread from start to finish and don't think it's worth reading what others have to say about it? Surely the more information (especially skeptical observations and rebuttals) the better when evaluating such an investment? Who suggested that this was an "investment for all"? Why exactly do you find it "promising"?


----------



## medici

I have been digging around my inbox and found the latest offerings to the German market - some interesting comparisons for fees


Merrion Raglan - 2nd syndicate managed on a part time basis
German Commercial fund

Entry fees 3%
Annual management fee 1% Gross asset value (these were trying to leverage at 85%) - this covers simply commercial property management - no development
Performance bonus - 20% of the profit in excess of 8% IRR
Professional set up fees charged but not disclosed
Acquisistion fees for German property up to 10%
€60k entry point


CMC - 6th syndicate management on a part time basis

Entry Fee 3%
Annual Management Fee 1% of the Gross asset value of the company (leveraged at 80%) - this covers commercial property management - no development
Performance bonus - 20% of the profit in excess of 12% simple interest - (this is a clever way of saying 8% IRR as per merrion above over the same time period)
Professional set up costs charged - not disclosed
Acquistion fees of up to 7%
€50k entry point
(all seems reasonable)

Augusta Syndicate - 7th syndicate managed on a part time basis

Entry fee 3%
Annual management fee .75% + property management fee of .15% - this comes to 0.9% of the gross asset value of the fund - this covers commercial property management only
Split of agent fees 1% of the Gross asset value of the fund
Professional set up costs .75% of the gross asset value of the company
Acquisition fees 8%
Performance bonus - 15% of the profits in excess of 12.5%

Brendan Investments - PLC structure with full time directors

Entry fee 0%
Annual management fee 1% of the Gross asset value of the company - to include both commercial property management and property development 
Performance bonus 20% of the profits in excess of 8% IRR
Professional set up fees up to a max of €750,000 for a €50m fund raising (ie 1,5% of the equity)
All transaction done at cost

These are the facts that are out there and from a fee structure the two best options seem to be CMC and Brendan Investments. The others particularly there transaction costs are too high and while the performance bonus is low for Augusta - the directors seem to be taking out so much money up front I suggest that they are only interested in investing money and taking fees than delivering returns and taking a bonus.


----------



## alser2

i have had a browse through the arguments and yes i agree it is worth reading them. the thing is some people accuse each other of not researching fully or limiting their research to this thread. i went to one of the roadshows in cork a few weeks ago and i heard eddie and the other directors present the company. this prompted me to have a browse at the website and here. incidentally i wonder if many on this thread went to a roadshow?
i use the word promising as the majority of the funds are going to germany and the level of investment is still on an upward trend. ireland the uk and portugal have peforming economies also, albeit for a minority of the investment.
i say investment for all in that at the roadshow eddie himself said that the gearing aspect is not for the fainthearted so of course people will naysay this fund and they are entitled to.


----------



## Sunny

medici said:


> I have invested in other geared syndicated products and they have worked out well and looking at the fees in this case they seem reasonable particularly as there are no upfront fees and therefore all of your investment gets invested from day one.


 
Apart from the legal, advertising, structuring costs etc that have to be paid of course which represent 1.5% if they raise €50m and more if they raise less. They don't call it an upfront fee but if it looks like duck, sounds like a duck and walks like a duck, then it is probably a duck! Not saying it is a bad deal and the no up-front commission is one of the more attractive parts of this deal but they can't deny the up-front 'cost' is there.


----------



## Sunny

Medici,

Thanks for the comparison. Useful guide Would just say though that BI seems to employ much more leverage than the other deals so they are going to make alot more money on a 1% management fee on the gross asset value of the fund that is 300% leveraged than another fund that is only 80% leveraged. Nothing wrong with that per se but the importance of the leverage in this deal is sometimes being overlooked.


----------



## LDFerguson

Medici and alser2 - this thread has been dogged by individuals who have posted opinions, purporting to be nothing more than interested bystanders but in fact have vested interests.  Such sad and childish practices devalue the whole thread really.  

So please forgive me for asking - have you any connection to Brendan Investments?


----------



## ClubMan

Yeah - at this stage any newly registered contributors posting purely positive spins on _BI _are surely going to be suspected of having some vested interest or association with the company/product give what has gone before. This abuse of _Askaboutmoney _rather than boredom on the part of some readers might be a good argument for closing such a thread!


----------



## medici

Sunny - Just to explain the fundamentals of leverage

80% leveraging computes to 400% as per your calculation.

For instance if you are to buy a property for 25,000 and borrow 75,000 this would equate to 75% leverage or 300%

following on from this

if you are to buy a property for 25,000 and leverage at 80% this equates to c. 125,000 or 400% on your calculation.

The point is that all these syndicates are geared at largely the same basis and therefore the fees for the annual management are all approximately the same. 

As someone who has worked in corporate finance all my life maybe I haven't explained in my example well enough this point.

The reality is all these funds need to charge these fees to pay for management of the property etc. None of them are excessive.

This comment should also cover off the claim of vested interests. Simply trying to give the facts in a balance and simple way


----------



## LDFerguson

> This comment should also cover off the claim of vested interests. Simply trying to give the facts in a balance and simple way


 
You misunderstand me. I wasn't claiming anything. 

I just _asked_ - have you or alser2 any connection with Brendan Investments?


----------



## alser2

i only logged in today for the first time as a friend suggested i check out this website for a discussion. i dont have any connection with brendan investments, i am simply trying to get a full view of the package and i am also aware of the impending deadline at the end of october. i have not invested before so i want to be thorough.


----------



## McVittie

Finally, some hard facts from Medici. The paucity of informed competent analysis on this thread is finally laid bare. 

What has been the response of some people ? It is to disregard the informational quality of the comparative analysis and question the poster’s motives. 

People should read this thread in the full knowledge that (a) posters are anonymous and (b) many have no qualifications and professional competence in providing independent objective informed analysis. There are a few posters who demonstrate a professional competence in these matters: that is they have provided solid information, facts and well informed analysis. This is evident from their posts. There are also some industry enthusiasts and amateur armchair pundits who largely base their assessment on anecdote and third party information, cutting and pasting it, to shore up their partially informed views. A few are who are knowledgeable have engaged either naively or knowingly in misrepresentation peppering their posts with comments and innuendo which in my opinion are both scurrilous and malicious in its intent. 
_
Converse/ Hydra - I have deleted your continued attempt to introduce red herrings to take the debate off the product.

We have been extremely patient with you and your continuous attempts to take the thread off topic. In future, we will simple delete the entire post.


Brendan 
Administrator 
_


----------



## gonk

medici said:


> I have been digging around my inbox and found the latest offerings to the German market - some interesting comparisons for fees.


 
Don't know about the Merrion Raglan fund - On the CMC fund you are mistaken. Here is the relevant section of their brochure:

http://www.cmccapital.ie/Information Memorandum CMC 5 German Property Syndicate.pdf

_If exceptional returns are generated, then CMC Capital earns performance fees. These will be 20% of the profits in excess of 12% p.a. return on investment (i.e. 20% of the profits in excess of €90,000 over 7.5 years, on a €100,000 investment)_​ 
This equates to an 8.93% IRR - not 8%. That said, I would agree the way CMC have put this is confusing to say the least.​ 
I note, medici, two things: firstly, you are yet another new poster posting in favour of BI and secondly, you are continuing the pretence by other similar posters that property acquisition costs which you have listed for Merrion, CMC and Augusta will not also be incurred by BI. Once again, these are costs such as stamp duty and legal fees which it is certain BI will incur. BI have disclosed this in their prospectus but haven't quantified them.​


----------



## LDFerguson

alser2 said:


> i only logged in today for the first time as a friend suggested i check out this website for a discussion. i dont have any connection with brendan investments, i am simply trying to get a full view of the package and i am also aware of the impending deadline at the end of october. i have not invested before so i want to be thorough.


 
Thank you for clarifying this.  

Any Yes or No answer from medici?


----------



## alser2

no problem LD, i will keep reading up here and hopfully someone can answer any questions i may have. i'm fairly sure i will go ahead but i guess there is time yet to get more detail.


----------



## DrMoriarty

converse2007 said:


> Finally, some hard facts from Medici. The paucity of informed competent analysis on this thread is finally laid bare.


Oh, Lordy, Lordy...  

converse2007, thanks for the cut-and-paste job. Fascinating. There were in fact several responses to your earlier, eh, 'suggestions' about defamation and innuendo. I was just one of those who put it to you then that the boot was rather on the other foot — that the only defamation going on around here was coming from the direction of Mantus and of those (presumably entirely separate?) individuals — all of them newly-registered posters — who have been promoting _Brendan Investments _on this board.

While (justifiably) critical of certain aspects of this investment product and the manner of its promotion, nobody here has for one moment 'called into question the competency and integrity' of either Eddie Hobbs or the board of _Brendan Investments Plc_. Some have challenged the arguments being advanced here (if they may be called arguments) for investing in their product, which is entirely legitimate. Others have expressed a suspicion that some of these newly-registered posters may have some connection to _Brendan Investments_. Some of us (myself included) have simply asked these posters in the simplest possible terms to declare whether they have any such connection. Most of those requests have been ignored, or sidestepped along the lines of 'I'll declare when all youse other feckers declare first...', usually overlaid with further accusations of bias, incompetence and/or assorted personal shortcomings.

So maybe you'd hang on to your defamatory hat there for a minute?

Now, Liam has asked medici for a simple 'yes or no' clarification, so I'll ask you again the .

(a) Yes or no, are you and Mantus the same person?
(b) Yes or no, do you have any association with the Brendan scheme or with its promoters? 

The hard facts will do.


----------



## LDFerguson

Converse2007, 

If someone anonymously posts on Askaboutmoney "I think Liam Ferguson is a fantastic broker and you should all give him a call", it is hugely relevant for other readers to know whether or not the poster has a connection with me or is just a happy customer.  

Readers of this thread should bear in mind that NOBODY who has posted here, myself included, is offering professional advice in this thread.  This is stated in the Askaboutmoney guidelines.  Those that post in support of BI may have a vested interest in doing so.  Those that post in criticism of BI may have a vested interest in doing so.  

Thanks for the link to a UK court case.  I'll take it into consideration when deciding whether or not some of the comments made about me in this thread constitute defamation.


----------



## McVittie

*Brendan*
This is not the first time you have moderated and deleted what you consider to be off thread points by me. Whilst I may not agree, I do respect your decision in this. I respectfully suggest that the case cited might be brought to posters attention.

*DrM*
To answer your questions (a) I am not Mantus and I am not associated with BI or its promoters interests. Nor do I have an interest from which I derive an income in analysing BI or advising on BI.

In which case I’m sure you won’t mind answering a question of mine:


Have you an interest in BI or any of its the promoters beyond this discussion board ? 

Do you derive income from this interest ?
(I used a cut and paste which was accurate and linked to a definitive source. I imagine that you would do likewise.) 

*Liam *
You’ll note my helpful link was removed. I haven’t mentioned “advise” merely analysis. You say “Those that post in support of BI may have a vested interest in doing so. Those that post in criticism of BI may have a vested interest in doing so.” 

I assume you are referring to constructive support or criticism demonstrated through objective fact based analysis. 

*In general observation:*
Also of interest is the direct persistent questioning of posters “vested interest in BI” and not of “vested interest in criticising BI.” 

Converse


----------



## DrMoriarty

converse2007 said:


> Have you an interest in BI or any of its the promoters beyond this discussion board ?
> 
> Do you derive income from this interest ?


Absolutely none, on either count. I do not and will never derive one flat cent of income, commission, fees, share options, dividends, or emoluments of any nature from analysing or advising on _BI _or any of its putative rivals.

Nor do I have any family, marital, social or professional connection to Eddie Hobbs. But I guess y'all figured that one out already.


----------



## Duke of Marmalade

My oh my, I've been away for the day and already my last post is buried 2 pages deep. 

Lots of new recruits to AAM, Boss. I wonder will they come and go just like Billy.



alser2 said:


> no problem LD, i will keep reading up here and hopfully someone can answer any questions i may have. i'm fairly sure i will go ahead but i guess there is time yet to get more detail.


 
No, this cannot be serious. I was always assuming that the only followers of the Pied Piper would be those seduced by the high profile and misrepresentative promotion of the scheme. I cannot believe that anyone who has read this thread would embark on this currach for love nor money.

What is this baloney about the anti lobby having vested interests? Afraid of the competition, that is ridiculous, but even if it does exist it would be infinitesimal compared to the vested interest of those about to make millions from BI.

Protestions of independence from the Hydra reminds one of that old cliche "they would say that wouldn't they".


----------



## bungaloid

Harchibald said:


> What is this baloney about the anti lobby having vested interests? Afraid of the competition, that is ridiculous, but even if it does exist it would be infinitesimal compared to the vested interest of those about to make millions from BI.



That is certainly true. (Although we all know how tenacious vested interests can sometimes be in response to even the tiniest perceived threat.)

Pretending for a moment you were a member of the great unwashed with a spare 20 grand, which you wanted to invest in european property (for some reason), would you invest in

that rental apartment in Bulgaria
Brendan Investments
european property index ETF e.g. IPRP
something else (let us know)


----------



## Duke of Marmalade

bungaloid said:


> That is certainly true. (Although we all know how tenacious vested interests can sometimes be in response to even the tiniest perceived threat.)
> 
> Pretending for a moment you were a member of the great unwashed with a spare 20 grand, which you wanted to invest in european property (for some reason), would you invest in
> 
> that rental apartment in Bulgaria
> Brendan Investments
> european property index ETF e.g. IPRP
> something else (let us know)


Indubitably 3


----------



## McVittie

*Dr M*

Thanks for your response. I’m intrigued by your subsequent addition and doubling up on putative. (has post editing recording & dating been disabled?) It seems we share a common position in a declaration of no conflict of interest thus we comply with posting guidelines. 

I detect nonetheless what I term a “vested” bias. For example your direct reference to one of the promoters by name hints perhaps at a motivation that is both intentionally provocative and reflective of the motivational sub-text of those whom LDFerguson has termed the “vested interests critical of BI” and its promoters.

*General observation and comment*
LDFerguson, probably inadvertently, hit the nail on the head when he wrote of the vested interests of those critical of BI (and its promoters). 

Now why would anyone have a vested interest in being critical ? This is a question readers of this thread should carefully consider. 

For example the contributor, Harchibald, appears to colloquially articulate a vested bias, portrayed though a consistent theme of writing of “exploitation” and “misrepresentation”, dispensed both in this and another thread. 

Of course readers should be mindful that posts supporting BI may have a promotional motivation. 

Before you rush in to responding to my quite deliberate discursive approach, I will declare my “vested bias” which is a genuine interest in discerning the motivation behind the text of those who react to challenging propositions. (Particularly those who understand the nature of internet publication and heading tags.)

Converse2007


----------



## Duke of Marmalade

Holy F, I will make allowances that Converse may, on this Friday evening, be partaking of intoxicating liquor, but can anybody else make sense of this ramble?


----------



## Nemesis

Nope. That certainly sounds like gobbledegook to me. Sounds rather like it's veering towards the kind of meaningless nonsense you might find in a paper produced by some postmodernist/deconstructionist 'academic'.


----------



## HorseBox

Moderators, is it not about time that this thread, which has obviously been infiltrated by unannounced vested interests and is consequently devoid of all credibility, is shut down?


----------



## ClubMan

Moved to _Letting Off Steam_.


----------



## Brendan Burgess

Converse 2007 (hydra,mantus et al.) 

I have changed the status of Converse2007 to Frequent Poster, so that you can respond to this thread through one name only. You have attempted to distract the discussion through multiple registrations. 

You do still have to abide by the Posting Guidelines. Attempts to drag the post off-topic will be deleted. 

Brendan
Administrator


----------



## Duke of Marmalade

This most enjoyable of threads now risks extermination. Victory to the Hydra.

I want to ask Converse2007 a str8 question.

The brochure states: *"other schemes suggest returns of 12% to 16% p.a., BI is superior to these schemes, and so should do better than them".*

This is probably the key representation, I presume reinforced at the roadshows. It's really all the punter wants to know.

So Converse, is that a fair representation of BI's prospects in your view?


----------



## Duke of Marmalade

Sumfin' happened here. Moderators?

_Refer_ has accused me (by direct contact and in a threatening way) of defamation in calling BI a "rip off" . I agree the term is not flattering, I think I picked it up from some TV series. 

However, if _Refer_ would refer back to my posts he will see that I have accepted that BI's charges are on a par for the genre. But I certainly *do* think they are extremely high compared to conventional collective investments, even geared property based ones.

BTW it was *I *who edited out the "rip off" comment as it was pointed out to me that I could be attributing it to Shane Ross, who whilst lambasting the scheme and its promoters probably did not use that precise expression.


----------



## Beauregard

We are thinking of investing 100k. We already own Irish property and two in Manchester, all appartments. We're not big enough to get into commercial property ourselves and this caught our eye. I have read the pros and cons and Brendan Investments doesn't appear overpriced but the downside is giving up control and locking away money? What is the "grey market" ?


----------



## Brendan Burgess

I am very disappointed in these threats sent by the Private Message function. 

I have moved them here

Converse and all the others have been banned.

Brendan


----------



## LDFerguson

Beauregard said:


> We are thinking of investing 100k. We already own Irish property and two in Manchester, all appartments. We're not big enough to get into commercial property ourselves and this caught our eye. I have read the pros and cons and Brendan Investments doesn't appear overpriced but the downside is giving up control and locking away money? What is the "grey market" ?


 
While the official duration of the investment is 10 years, if someone wants to sell their shares before this and a matching buyer can be found, this could be facilitated.  Such a grey market will only exist if there are sufficient buyers to match the prospective sellers.


----------



## MichaelDes

Beauregard said:


> We are thinking of investing 100k. We already own Irish property and two in Manchester, all appartments. We're not big enough to get into commercial property ourselves and this caught our eye. I have read the pros and cons and Brendan Investments doesn't appear overpriced but the downside is giving up control and locking away money? What is the "grey market" ?


 
Are you not worried about your position especially as there is a glut of apartments in manchester? It could take years to stabilise as according to last weeks Mail on Sunday - in mid-1990's, within central Manchester 500 units were built per year, now it's nearer 5000 units in 2007. Many are empty. Prices haven't been pushed up as a result of an under supply, but by an oversupply of cheap money. With 18% CGT coming into effect next year, this will see many more apartments flooding on to the market in an attempt to cash in.

Under the circumstances, I don't think it wise to punt with EH especially if your LTV is anyway high.


----------



## room305

Johnadams said:


> Can someone tell me is this a wrong assessment and if so why?



I'd say that's a reasonable assessment apart from as _Gonk_ has pointed out, the ridiculously low performance targets that have been set by the management team. 8% growth is a very low target in an environment where commercial yields often exceed this amount. It also likely that team would need performance close to this just to meet annual borrowing and sundry costs.


----------



## MichaelDes

Johnadams said:


> My own views from reading the SB Post in their syndicates section last week is that the fees seem normal compared to the market. The product strategy seems in line with a lot of other products out there and that the team excluding senor Hobbs seems pretty experiened.


 
Anyone able to give link to SB article?


----------



## IFT

..........


----------



## room305

Johnadams said:


> Again I would appreciate INDEPENDENT feedback.



I would sincerely hope this comment was not levelled in my direction. I have no position in or connection with _any_ publically accessible property fund.

I do have an interest in German residential property but this is through a private investment company that is not open to public investment.


----------



## IFT

edit..


----------



## Duke of Marmalade

*Re: Augusta is as unregulated as BI*

BI roused me because of the EH factor, and that is not personal but just a recognition of how vulnerable ordinary folk are in this situation.

I was told that Augusta are advertising double your money over 5 years, same as BI's quadruple your money over 10 years.  Is this true?  I haven't heard the ad.  I did look at their website, it talks of 14.5% p.a. return.  This is quite unacceptable.  The promotion of these entities is obviously quite unregulated, as warned by the SoA.  Anyone representing these funds and criticising BI is the proverbial pot calling the kettle black.

I was a dormant contributor until I read the Evening Herald claim of quadruple your money and I have focussed my attention on BI but the whole genre is badly in need of consumer protection legislation.


----------



## Duke of Marmalade

*Re: Senator strikes again*

Another vicious attack by SR on Eddie and BI in today's _Sindo_.

The gist:

Front page business news of how Irish investors in foreign holiday homes have been toasted (coincidence that this story appears today?)

SR denounces BI again on back page, referring to that front page article (so no coincidence), along with picture of Eddie that would make Richard Nixon look trustworthy.

Revised and less optimistic property report is mentioned.

Roadshow being deserted, according to staff at the hotels.

Trebling of max investment suggested as being a panic move to get critical mass.

These seem to contradict an article in yesterday's _Indo_ where it was stated BI have commenced due diligence on 115M on German property.


----------



## piglet

He seems to be confusing oil and water. The fall of the overseas appartment market was inevitable especially places like Bulgaria but commercial property in Germany etc is a different beast. Ross has a long record in writing against property as an investment but he does have it in for Hobbs, in a long list of people he vilifies. He once tore Dr Tony Ryan apart and told punters to avoid RyanAir if I recall.

Interesting though that he keeps attacking Hobbs. It does appear quite personal since his property scheme is pretty much par for the course. You describe him as less trustworthy than Nixon - do you think that's fair?


----------



## Duke of Marmalade

piglet said:


> You describe him as less trustworthy than Nixon - do you think that's fair?


 
I described the picture that was specially selected by SR that way. 

It is clear that SR's coverage is far from fair. For a start, 3 vicious articles in nearly as many weeks is way OTT. 

The tenuous connexion between Bulgarian appartments and German commercial is, as you point out, quite invalid.

Finally that picture was very deliberately selected.

Pulling the Senator's tail will turn out to be BI's greatest regret.


----------



## piglet

Fair comment Harchibald but I'd say most readers see through the venom as well.


----------



## Lance

Just as a matter of interest, is there anybody at all from AAM actually going to invest in this thing seeing that the closing date is next Wednesday?


----------



## Dman

Yeah I have. 
Although I won't dream of borrowing to invest in it to be honest as I think it's fairly risky investment. 
I won't be putting all my eyes into the basket but think for me it a good way to invest into the european commerical property market.


----------



## ClubMan

Dman said:


> I won't be putting all my eyes into the basket


----------



## Duke of Marmalade

Lance said:


> Just as a matter of interest, is there anybody at all from AAM actually going to invest in this thing seeing that the closing date is next Wednesday?


Didn't seem worth the effort when the max you could invest was 250K but now that I can invest 750K...


----------



## Brendan Burgess

Harchibald said:


> Didn't seem worth the effort when the max you could invest was 250K but now that I can invest 750K...



Harchibald - you seem like an honest type. If you want to put another €750k in under my name, that's ok with me.


----------



## Duke of Marmalade

Brendan said:


> Harchibald - you seem like an honest type. If you want to put another €750k in under my name, that's ok with me.


 
Using Brendan to invest in Brendan, next thing you'll be suggesting I borrow to invest in a geared fund.


----------



## Brendan Burgess

And today's question, with thanks to the Sunday Times: Who said: 


> what’s the point in helping consumers to drive down the drag          effect of charges from 1.5% p.a. to, say, 1.25% p.a. through a huge effort by the Regulator if consumers take this cost saving and invest it in funds taking investment risk they do not understand, e.g. a leveraged or property fund with a high level of gearing in a marketplace about to face a significant property downturn and where there could be the complete loss of capital?
> 
> 
> Most consumers haven’t a clue about what fund they are investing in or its relative level of risk.


[FONT=&quot]
[/FONT]


----------



## Duke of Marmalade

_Boss_, I can't find that reference. Page?

Niall Brady has a piece okay pointing out very stark double standard by Hobbs - he warned againsts such schemes whilst preparing BI - unbelievable.

Brady also picks up the question of how much is BI going to raise?
Hobbs says _"too early to know...we are were we wanted to be...we expect 90% in the last few days"._

Where they wanted to be was 50M in total, expecting 90% to yet arrive suggests to me they have about 5M at this stage.

The Tribune takes up this speculation as a straight contest between the Senator and Hobbs and also incidentally mentions the Hydra. Who says journos are not influenced by AAM?


----------



## Brendan Burgess

Try this link:

[broken link removed]

That will bring you to the Feedback on Submissions. 

Go to the one dated 13/1/2005 


It's the submission from the Consumers' Association of Ireland. Go to item 4.10 at the very end. 

Brendan


----------



## ClubMan

Harchibald said:


> Who says journos are not influenced by AAM?


Nobody - they have lifted stuff from here for ages now. No harm if it raises awareness about consumer/personal finance issues I suppose?


----------



## Brendan Burgess

> Who says journos are not influenced by AAM?



Nobody in their right minds. 

Brendan


----------



## Sunny

I loved EH's comment in the Sunday times where he says "I've made it clear this is for investors, not savers. Its impossible, though, to stop people making silkly decisions because they assume I've got some magic formula for making money".

Might I suggest to Eddie that it would have been possible if he didn't insist on being the face of this fund in every picture which was heavily publicised in the general media (including the late late show) knowing that he had a reputation of being a so called consumer champion. He chose to be the fore of this launch. He could have let the other directors do the publicity if he was wary of attracting the wrong type of investor.


----------



## Duke of Marmalade

Sunny said:


> I loved EH's comment in the Sunday times where he says "I've made it clear this is for investors, not savers."


 
To be sure, that is a blood curdling warning which should see most people off. Better still would have been _"It is for gamblers, not for...",_ but let's not be churlish_._


----------



## Millix

Richard Delevan's story in this Sunday's tribune 28-10-2007 also refers to AAM and BI hydra. 

he must have been at a creative writing class last week - can anyone explain what is meant by "dozens of property mavens looking for kabuki theatre to leaven the bloody mess of Michael Lynn et al"

*Kabuki* is a form of traditional Japanese theatre. Kabuki theatre is known for the stylization of its drama and for the elaborate make-up worn by its performers. 

a maven is one who is experienced or knowledgeable 

leaven means to mingle or permeate with some modifying, alleviating, or vivifying element


----------



## Brendan Burgess

Great. I thought I was the only one not to understand all those big words and their stringing together like that.

Brendan


----------



## Ghodadaba

" 
*Statement issued on behalf of Brendan Investments pan European property plc - *

*Brendan Investments extends investment deadline  *​ 
*31st October 2007* - Brendan Investments pan European Property plc today (Wednesday) extended its deadline for investment from 31st October to 30th November due to high levels of demand from both public and pension investors, and to tie in with the November pension deadline.

Vincent Regan, Managing Director of Brendan Investments, said:  “At this point, the Company has exceeded its minimum subscription level of €10 million and is now in a position to commit to the purchases of commercial property upon which it has been working.”  "


----------



## shanegl

I thought they were aiming for 50mio, not "exceeding 10mio". What implications does this have for costs?
Seems very suspect that they've pushed the deadline and also increased the maximum investment amount.


----------



## ClubMan

Minimum target in the prospectus is €10M.


----------



## ubiquitous

shanegl said:


> I thought they were aiming for 50mio, not "exceeding 10mio". What implications does this have for costs?
> Seems very suspect that they've pushed the deadline and also increased the maximum investment amount.



I suspect that the Brendan fund has flopped. A flop was always on the cards once they selected 31 October, the Pay & File tax deadline, as their subscription  deadline. Their marketing guys must have been asleep when they picked this date. Either that or they were totally over-confident. Such apparent carelessness at this stage would imho not bode well for the eventual success of the fund.


----------



## Brendan Burgess

Sounds like a serious flop. If they have raised only €10m, then the 750k in start-up costs represents an initial charge of 7.5%. 

I wonder if those who have committed to the fund withdraw at this stage? 

Brendan


----------



## Insighter

If the company believes it can raise more equity, ( the max is extremely high at €250m) by a one month extension it is reasonable for it to do so. In the interim it is unreasonable to expect it announce its running capital base given the number of people who wish it not succeed.

The set up costs are fixed at 1.5% equity raised subject to a cap of 750k which kicks in at 50m


----------



## Dman

Hi Folks,
I rang one of the director's of the Brendan Investment as I had invested but not really happy that they have moved the end dates. 
Gives me the impression that they have not raised near enough capital.
I was told you can get a full refund of your investment for the next 48hrs because they have moved the dates from the 31st of Oct to end of Nov.


----------



## Sunny

Insighter said:


> If the company believes it can raise more equity, ( the max is extremely high at €250m) by a one month extension it is reasonable for it to do so. In the interim it is unreasonable to expect it announce its running capital base given the number of people who wish it not succeed.
> 
> The set up costs are fixed at 1.5% equity raised subject to a cap of 750k which kicks in at 50m


 
The 250m is the leveraged amount. They were looking for €50m capital.

Are you sure about the set up costs? My understanding is that it is circa €750,000 no matter how much money is raised which works out at 1.5% if 50m is raised but 7.5% if only 10m is raised. Check page 53 of the prospectus


----------



## Insighter

In newsletter on website, here is position; 

The Directors confirm that the maximum deductions from all equity raised will be 1.5% representing the maximum capped set up costs at €750k as stated in the Prospectus for total equity raised of €50 million. For higher equity raised eg €100 million the effect of the cap is to drop this to 0.75%. For equity raised less than €50 million the set up costs will not be more than 1.5%. Therefore if you invest €10,000 the maximum deducted is €150 and will be lower if the total equity raised is over €50 million. This is used to cover all set up costs and professional fees. None of this money is paid to the Directors. 

An extension is common for more equity but in the meantime the plc is up and running for existing shareholders. Will be interesting to contrast final results against other property schemes open over the same period.


----------



## Sunny

Insighter said:


> In newsletter on website, here is position;
> 
> The Directors confirm that the maximum deductions from all equity raised will be 1.5% representing the maximum capped set up costs at €750k as stated in the Prospectus for total equity raised of €50 million. For higher equity raised eg €100 million the effect of the cap is to drop this to 0.75%. For equity raised less than €50 million the set up costs will not be more than 1.5%. Therefore if you invest €10,000 the maximum deducted is €150 and will be lower if the total equity raised is over €50 million. This is used to cover all set up costs and professional fees. None of this money is paid to the Directors.


 
Interesting that they do say that in a newsletter but that is not what it says in the official prospectus (unless they have changed it or I am incorrect). How do they justify it though. Surely the start up costs of the fund such as advertising, legal, professional fees etc are the same whether they raise 10m or 50m so if they raise €10m, the costs will still be €750,000 or am I missing something?


----------



## Duke of Marmalade

Maybe a bit early for post mortems but let's presume it has been a flop.

With hindsight we can see that BI was attempting the nigh imposible, to sell a retail investment product (a risky and long term one at that) without any distribution or client base.

It was relying solely on the huge marketing appeal of Mr Hobbs to make this, uniquely, an investment product that would be bought without having to be sold.

Whilst the marketing effort was impressive, nobody who read any of Ross' articles or, to a lesser extent, Brady's, would touch it with a 40 foot pole.


----------



## Brendan Burgess

Actually, the vast majority of pension funds!  They invest most of their money in companies which pay Corporation Tax. 

Brendan


----------



## Duke of Marmalade

An interesting observation _Boss_. The fact remains that if a pension fund invests directly in property it is spared these taxes. Back to the argument that this plc is less tax efficient than pension/life products investing directly.


----------



## MMilken

A self-administered pension scheme could invest in this 'Brendan' company on the usual pension 'tax-efficient' terms.

Not that I would recommend them to of course


----------



## Dave Vanian

I see on BI's website, there's a link on the left side of the Home Page "For information on investing with your pension, please contact our pension advisor."  When you click the link it brings you to the website of a Cork-based company called Corporate Life.  

But I can't see any details on CL's website of who they are or who they are regulated by.


----------



## MMilken

Looks like webkitchen set up the second site for free.


----------



## ClubMan

[broken link removed]


> Number
> 36332
> 
> Legal Name
> Jamesmont Limited
> 
> Trading Name
> Corporate Life
> 
> Address
> Corporate House
> 15 South Mall
> Cork
> 
> Product Producers
> Bloxham, Caledonian Life, Canada Life Assurance (Ireland)
> Limited, Eagle Star Life Assurance Company of Ireland Limited,
> Friends First Life Assurance Company Limited, Hibernian Life &
> Pensions Limited, New Ireland Assurance Company plc, Standard
> Life Assurance Company, Irish Life Assurance Plc
> 
> Status
> Multi-Agency Intermediary


----------



## Sherpa

Anyone got easy access to the CRO website to see who the Directors of Jamesmont Ltd are?


----------



## Sherpa

MMilken said:


> A self-administered pension scheme could invest in this 'Brendan' company on the usual pension 'tax-efficient' terms.


 
Yes, but not as tax-efficiently as a direct investment in property through a pension scheme.


----------



## MMilken

Just as tax-effeciently as most pension schemes that invest in a fund consisting of quoted companies.

Bendan property is akin to a fund, not to one direct property.

I am not a fan - but your comparison is invalid.


----------



## ubiquitous

Sherpa said:


> Anyone got easy access to the CRO website to see who the Directors of Jamesmont Ltd are?



 Company Name: 	JAMESMONT LIMITED
Registered Number: 	386501
Company Type: 	PRIVATE LIMITED BY SHARES
Incorporated: 	24/05/2004
Company Status: 	NORMAL

Share Cap. Currency: 	EURO CURRENCY UNIT
Authorised Capital: 	250,000

Next Annual Return Date: 	24/05/2008
Last AR Filed: 	24/05/2007
Last Accounts To Date: 	31/12/2006

Registered Address: 	15, SOUTHMALL,
	4TH FLOOR,
	CORK.

	View Other Companies At This Address? NEW!


Principal NACE Code: 	65.23   OTHER FINANCIAL INTERMEDIATION N.E.C.
Previous Names: 	
JAMESMOUNT LIMITED

	Businesses Owned By This Company? NEW!

Directors and Secretary - as per C.R.O. at 02/11/2007
Directors Special Note
Please note that the information displayed on this printout as to the particulars of the directors and secretary of this company may not be complete or up to date, as there may be unregistered documents which affect the position. Please refer to the list of Documents below, and if necessary, consult the company file or images for full, up-to-date particulars as to the company's officers. If this printout is blank as to officer details, please consult the images of the registered New Company documents.

Name: 	CLARE CLEHANE  Other Directorships?
Title: 	DIRECTOR
Address: 	7 Jamesmont,
	Rochestown
	Cork


Date of Birth: 	26/09/1973


Name: 	DAVID JOHN CLEHANE  Other Directorships?
Title: 	DIRECTOR
Address: 	7 Jamesmont,
	Rochestown,
	Cork


Date of Birth: 	28/06/1968


Name: 	DAVID JOHN CLEHANE  Other Directorships?
Title: 	COMPANY SECRETARY
Address: 	7 Jamesmont,
	Rochestown,
	Cork


Date of Birth: 	28/06/1968


----------



## Duke of Marmalade

MMilken said:


> Just as tax-effeciently as most pension schemes that invest in a fund consisting of quoted companies.
> 
> Brendan property is akin to a fund, not to one direct property.
> 
> I am not a fan - but your comparison is invalid.


 
_MMilken_, I think it is your comparison which is invalid. There is no question of a pension policy/fund directly going into the cement business, say, rather than investing in CRH. Brendan is a property manager and is taxed in that capacity. The same property management could be done under a pensions policy without the intervening share structure and these taxes would be avoided.


----------



## MMilken

What a ridiculous thing to say.

Brendan PLC will be taxed in the exact same way that other property companies (such as REITs would be taxed) - many people use their pension funds to gain tax-efficient access to a REIT, do they not?

Many pension schemes invest in quoted companies - do they not?

Just because the company is taxable does not mean the tax-efficiency of accessing it through a pension is lost.


----------



## Sherpa

MMilken said:


> Just because the company is taxable does not mean the tax-efficiency of accessing it through a pension is lost.


 
Agreed.  But the point I am making (and Harchibald too) is that it would be possible to get even more tax efficiency by investing directly in geared property thorugh a pension fund.


----------



## MMilken

I am making the point that many investors invest in other PLCs through their pension fund, I do not think one can categorically say this is a bad investment for pension investors on tax terms - most pension equity funds would invest in similarly taxable entities.

I am not disputing that it may be an awful investment in general.


----------



## Duke of Marmalade

Let's try putting it this way. A plc is subject to two types of taxes, internal on the activities of the plc and external on the gains/divies received by the investor.

For plc's in ordinary industrial activity a pension fund/policy is not capable of performing that activity (not least for regulatory reasons) and so has no choice but to use the plc, thus inevitably suffering the internal taxes. It is of course exempt from the external taxes.

For a plc which is nothing more than a fund manager itself, that's the very activity that pension funds are meant to be able to do themselves and if they do do it themselves, both the internal taxes and the external taxes are avoided.

However, I do agree that many pension funds do invest in these plc funds, possibly because they don't have the critical mass or even know-how to go it alone.

BTW under the old tax system of ACT credits, pension funds *did* actually enjoy a rebate of internal corporation tax at least, though not of other internal taxes.


----------



## MMilken

It is a PLC - that's my point, many pension fund investors invest in PLCs...now whether or not this is a good PLC is another matter.


----------



## Brendan Burgess

Hi Milken 

You are missing the point that Harchibald is making. 

If a pension fund buys properties directly, they will pay no income tax or CGT. 

If a pension fund invests in BI, BI will pay income tax and CGT and the pension fund will not be able to reclaim it. 

Of course, if a pension fund invests in other Plcs, they will pay income tax and CGT as well. 

So if you have a self administered pension fund and you want to allocate part of it to property, you should buy property directly or buy a pension fund. But you should not buy a plc to invest in property. 

Question. If an Irish pension fund invests in English and German property, presumably it pays English and German taxes and can't claim them back. So would that eliminate the advantage of a fund status over a plc status?

Brendan


----------



## Duke of Marmalade

_Boss_, I think the answer to your question is that it is only the 12.5% Irish corpo tax that is at stake here, so not such a big deal. In short, I do think investing in a plc does involve a tax leakage of 12.5% of its profits.  Other foreign taxes are probably neutral as to the legal vehicle selected.


----------



## MMilken

Brendan said:


> Hi Milken
> 
> You are missing the point that Harchibald is making.
> 
> 
> If a pension fund invests in BI, BI will pay income tax and CGT and the pension fund will not be able to reclaim it.
> 
> 
> So if you have a self administered pension fund and you want to allocate part of it to property, you should buy property directly or buy a pension fund. But you should not buy a plc to invest in property.


 
Seems like an invalid comparison.

Buying a property myself would involve me choosing the property - if I like the expertise of Brendan then I won't get this by buying property directly.

Sounds a bit like saying that an Investment Manager charging 1% is too high because I can buy the stocks and shares myself...not true though because I might be happy to pay for investment manager's expertise.


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## Brendan Burgess

It is not invalid at all. 

If you buy through a fund or through a plc, you pay management charges. 

If you buy through a plc, you pay additional tax charges. 

Brendan


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## MMilken

If you buy through a PLC you own shares in the company and have a say in how it is run.

Not so if you buy in to a property fund.

Apples are being compared with oranges.


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## Brendan Burgess

MMilken said:


> What a ridiculous thing to say.
> 
> Brendan PLC will be taxed in the exact same way that other property companies (such as REITs would be taxed) - many people use their pension funds to gain tax-efficient access to a REIT, do they not?
> 
> Many pension schemes invest in quoted companies - do they not?
> 
> Just because the company is taxable does not mean the tax-efficiency of accessing it through a pension is lost.



We were dealing with your original point. Pointing out the tax advantages is not ridiculous. 

There are other issues - but this does not affect the point which you made which was invalid. 

Brendan


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## Duke of Marmalade

MMilken said:


> If you buy through a PLC you own shares in the company and have a say in how it is run.
> 
> Not so if you buy in to a property fund.
> 
> Apples are being compared with oranges.


 
Of course they are, all we are saying is that the PLC Apple pays more tax than the Fund Orange, do you accept that _MMilken?_

I must say that whilst from time to time some stockbroker tries to convince me to buy some share or other, I have never heard it agrued as a reason that I will have a say in how the company is run.

Do you think having a say in how _BI_ is run is a significant factor which potential investors should take on board?


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## MMilken

Brendan - I said it was taxed the same as other property companies...not property funds, so my point is correct.

Many people's pension funds invest in property companies - Brendan is a proeprty company.

I never said it was the same as a property fund.

Well harchibald - it's not a deciding factor when comparing one company with another (as it will equally apply in both cases) but it is a factor when comparing Brendan with a FUND.


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## Duke of Marmalade

Okay, lets agree that the  comparison is that a PLC pays an extra 12.5% corpo tax but in compensation you have a say in running the plc.


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## IFT

edit..


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## Duke of Marmalade

> However, Regan said that, under its prospectus, it could not give further information as to the level invested until the revised closing date of November 30.


We can be told that the fund is on target. We can be told that the 10M has been reached. We can be given a detailed geographical breakdown of investors.

But, Alas, the prospectus prevents us from knowing the most important info of all, HOW MUCH?

I see the Senator has struck punch number 4, though he has changed that photo to a much friendlier version.


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## Humpback

The Senators article, as mentioned above.


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## Duke of Marmalade

I see Eddie is given a free hand in Rossy's column today.  Anybody get the whiff of legals here?

Eddie gives us a choice, we can either watch our assets gobbled up by oil-fed inflation and read about it "with our latte and croissant" or we can seek salvation in _BI._

I doubt this will generate much take-up, for anybody who reads Rossy on a regular basis must surely be well frightened off.


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## Duke of Marmalade

> There has been consistent suggestion that this company was engaged in activity damaging to shareholder interests by you and a small number of other posters despite the facts to the contrary. Posting anonymously neither protects the poster or the website administrator.


 
_"...engaged in activity..."_ 

_Wilkes_, You make it sound like an accusation of terrorism or something, whereas we (the vast majority of contributors to this thread) have simply been pointing out the high costs and risks of this product being promoted to a mass market without any scope for independent financial advice.

I don't quite know who or what you are threatening. The most strident critic has been far from anonymous; are you suggesting the _Boss_ should be consulting with his lawyer?


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## Sherpa

Any news on Brendan Investments now that we've reached the closing date?  Wonder how much was raised in the end.


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## Brendan Burgess

This is what the website says, which I think is quite funny.



Brendan Investments offer for subscription is now closed.

Brendan Investments has exceeded its minimum subscription level. 

Brendan Investments is currently updating the web-site and it will be live again soon. 


[broken link removed]
[broken link removed]
[broken link removed]


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## Coordinated

"We have a child . . . it's a little bit lighter than we expected but it has all its fingers and toes, " Hobbs said in Today's Sunday Tribune.


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## ClubMan

Brendan said:


> This is what the website says, which I think is quite funny.
> 
> 
> 
> Brendan Investments offer for subscription is now closed.
> 
> Brendan Investments has exceeded its minimum subscription level.
> 
> Brendan Investments is currently updating the web-site and it will be live again soon.
> 
> 
> [broken link removed]
> [broken link removed]
> [broken link removed]


Where's the joke?


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## Brendan Burgess

I find the supplemental prospectus followed by a second supplemental prosecpectus funny.


Brendan


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## zag

I find the whole thing funny.  Three short factual lines.  Technically correct, but not exactly making the best use of the medium that is the internet.

z


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## Cantona7

From this mornings fxcentre site...
Brendan Investments, the property fund set up by broadcaster and finance guru, Eddie Hobbs, has raised just E13m - far short of the E250m he had hoped to raise.
However, Brendan Investments said that it was pleased to have raised the E13m given the "testing" market conditions.
The company said it will set about building a E50m property portfolio.
Brendan was launched by Mr Hobbs in September. The other members of the board are the fund's managing director Vincent Regan, Hugh O'Neill, Pat Owens and barrister Dermot Flanagan, who was appointed the company's chairman.
The fund said that 700 people had subscribed for shares in company with an average of E19,000 each.


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## Brendan Burgess

So what are the implications of this small amount for the cost structure of the fund?  Does it not put the initial costs up very high as they will be spread over only €13m? 

Brendan


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## shanegl

Announced while Cowen was making the Budget speech. Says it all really.


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## F. Kruger

Brendan said:


> Does it not put the initial costs up very high as they will be spread over only €13m? Brendan


 
I doubt it. I expect that the initial cost will be in the region of 1.5% of Equity raised


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## Duke of Marmalade

Eddie stated in his _Sindo_ "right of reply" that the initial costs debited to the fund would be capped at 1.5%, that's about 200K. But the costs will in fact have been at least 750K as per prospectus, leaving the lads over 500K behind.

I am not an expert but does 50M represent critical mass? We are told property selection/development/management is very expensive. Is 500K management charge enough? It must certainly reduce the scope for diversification.

Several reasons were cited for the "flop" but surely the most convincing is that an attempt was made to bypass the intermediary market. People just don't buy 10 year investments on impulse, even if promoted on a very highy profile.


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## MichaelDes

Harchibald said:


> Leaving the lads over 500K behind.


 
Maybe there will be some nixer work available again in Rte.


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## Brendan Burgess

Is the Sindo article legally binding on them? 

Did the prospectus mention a cap? 

It's hard to know why it flopped. I think that most of us look to Eddie as a campaigner and entertainer.  We don't like it when he moves to the other side and starts selling investments to us on which he stood to make lots of money for himself. 

We might not like financial institutions, but I am told that Irish Life has quietly raised €100m in an overseas property fund lately. We don't like them, but we tend to trust them more than a group of individuals. 

Brendan


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## F. Kruger

Brendan said:


> We don't like them, but we tend to trust them more than a group of individuals.


 
I think that it is more down to the type of service. You can't really compare an 'Advisory' Service and an 'Execution Only' Service, which is what you are doing in the above example.

It has nothing whatsoever to do with personalities but rather whether the target market was is ready for this type of investment. Timing would also have played its part.


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## Duke of Marmalade

Brendan said:


> Is the Sindo article legally binding on them?
> 
> Did the prospectus mention a cap?
> 
> Brendan


Good questions Boss.  As I have already observed, this volunteered concession will cost the promoters a cool 500K.  It was conceded late on when it must have been obvious to them that no way would they meet their 50M target.

Let's watch their accounts very closely to see that indeed only 200K was charged for set up costs.


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## ClubMan

Cantona7 said:


> From this mornings fxcentre site...
> Brendan Investments, the property fund set up by broadcaster and finance guru, Eddie Hobbs, has raised just E13m - far short of the E250m he had hoped to raise.


_EH _was just on _Newstalk's Down To Business _and mentioned "raising a little over €13M".


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## TSThomas

€13M versus €250M? Sounds like they were aiming for the Sun & crashed into the Moon instead.


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## ClubMan

The €13M is what they collected directly and will be multiplied several times (_EH _mentioned up to 3 times I think) through gearing/additional borrowing. Not sure if €250M represents a target for what they wanted to collect directly or the geared amount?


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## Brendan Burgess

The target was to raise €250m and leverage it up to a total of  €1billion 

Brendan


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## ClubMan

Yikes!


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## IrlJidel

Brendan said:


> The target was to raise €250m and leverage it up to a total of  €1billion
> 
> Brendan



Their target was 50M, with minimum of 10M and max of 250M.


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## Brendan Burgess

I stand corrected.


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## mercman

Extopia. That seems the best idea I have heard of. The reason why this has flopped is two fold. Firstly sentiment in property to the ordinary man has gone - simple as that. The days of making a fast buck in property are over. It will take time, effort, expertise and luck from here on in for the next five years. Secondly, some of the team behind this venture have been riding on the crest of a wave. The wave is beginning to wobble. Hand back the money men and then you can hold your heads up high.


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## extopia

Agree completely - but let's face it, that will never happen.


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## mercman

This looks like one that will be interesting to watch. I bet the Promoters aren't sweating and that their fees will be paid. Another course of complete disregard for Investor funds. Will bed interesting to see if Banks will support this as they have dropped from 250 million to a derisory figure. I do believe that if theinvestors form a Group, they will be able  to shame the project into refunding those Investors that want their money back.


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## F. Kruger

mercman said:


> Extopia. That seems the best idea I have heard of.


 
I'd love to hear it (?)


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## kellyiom

how come this isn't covered in the forum restrictions on talking about stocks as it as a plc?


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## Brendan Burgess

We do not allow speculation about the prices of shares in quoted companies. 

This is not a quoted company.

It is a plc, but effectively it is a collective fund like any others. 

Brendan


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## kellyiom

derr, of course, should have known that- tks


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## Duke of Marmalade

Just when I thought the Senator had taken pity on our Hero, he's right back sticking the boot in, in today's _Sindo_.

Can you imagine, _Rossy_ actually waded through the BI share register and his findings suggest that of the €13M quite a fair proportion came from the Lads and more sinisterly from pension vehicles with whom the Lads have considerable connections. 

_Rossy_ also exposed the claim that the reason for the extension of the subscription period into November was to accomodate huge pensions demand. Everyone knows that pension season ends in October. The only pension moneys appear (according to _Rossy_) to be from the above mentioned connected vehicles.

I spot that _Rossy_ has set a trap. He reminds us that the set up costs are 750K but fails to allude to the fact that in the _Sindo_ itself our Hero promised to cap these at 1.5% (200K as it transpires). The Lads are surely too smart to think that the Senator has forgotten that promise.


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## camel

I've just read this article. Does it not just mean that these guys have confidence in their own project (in a similar way to director share purchases indicate internal confidence in a company)? That was my reading anyway.


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## TSThomas

That's one way to look at it alright, though given how they only just passed the minimum subscription threshold in the first place it's not exactly a ringing endorsement either.


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## QED

After watching Eddie Hobbs preaching last night, I was wondering how this company has performed for the public who made investments?

A quick google turned up nothing recent.


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## canicemcavoy

QED said:


> After watching Eddie Hobbs preaching last night, I was wondering how this company has performed for the public who made investments?
> 
> A quick google turned up nothing recent.


 
Surely there is a huge conflict of interest if someone gives consumer advice while at the same time has their own large-scale financial interests?


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