Syndicated Investments

Loan Notes & Loan Agreements

We use loan notes to raise finance for projects. In the past, they were used for mezzanine finance, to bridge the gap between the purchase price of an asset and the amount the bank were prepared to lend. Increasingly, as the banks are not lending at the same frequency, they are used for all sorts of financing from restaurant startups to land purchase. The common theme is that the lender (usually our pension scheme) receives a coupon/interest payment and does not own any equity in the project.

Coupons to pension schemes are free of tax. If a private client participates, they will need to declare the coupon for tax and it will be charged at income tax, highest marginal rate. If there is a property security offered, we use the solicitors bank account to collect the money and if not, the money is sent directly to the borrower.



We have been using partnerships for some transactions over the past three years. They are a natural replacement for the Exempt Unit Trust, which we can no longer use due to changes in the regulatory environment. Where a real asset, say a property, is being purchased for the benefit of the investors, we favour the partnership approach. Each individual (pension or private), owns a share in the asset, proportionate to the amount invested. They receive distributions of profits (rent) from time to time, as written in the agreement. They receive back their original investment plus any proportionate profit when the asset is sold. Pension investors pay no tax on the distribution to the fund; private investors will pay income tax on annual distributions and CGT on any profit from sale. (until the end of 2014, private investors will pay no CGT on property transactions as long as the asset is held for seven years). Partnerships are used for larger deals as they can are more expensive to establish and maintain. We provide a full service including IM production, provision of partnership documentation and acting as AIFM to comply with Central Bank requirements.