Eddie Hobbs new Brendan Investments vehicle

Status
Not open for further replies.
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):
  1. What initially does it cost to invest €100k in this BI deal?
  2. Am I purchasing shares in this "plc"?
  3. 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?
  4. 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?
  5. How do I get my money back? When can I get it back?
  6. How does this "set up" differ from other geared property investments I have from qualified investment funds (Custom House Capital) and Hibernian Life?
Click to expand...
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:confused: 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.
 
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.
 
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.
Click to expand...

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.
 
IMHO mantus took brendan's summary apart.
Click to expand...

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.
 
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.
Click to expand...

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.
 
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.
Click to expand...

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?
 
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

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
 
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.
Click to expand...

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.
 
Harchibald said:
Presumably that is usually the case with these things.
Click to expand...

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.
 
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
Click to expand...

But a good one none the less.
 
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.:)
 
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
 
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 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.
 
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?
 
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.
Click to expand...

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.
 
Status
Not open for further replies.
Back
Top