Custom House Capital- Investment Property Fund

A friend who is an accountant advised me to invest in a Custom House Capital Property Fund a few years ago. At the time I didn't have spare capital so an interest only loan was arranged with BOI UK for €250,000.

The properties concerned were a shopping centre in Germany, properties in Switzerland, and office blocks in The South of France. I was told at the time that the rents being achieved would not alone pay interest only on the gearing within the fund but also make capital repayments- this is the only reason I decided to go ahead as I felt that even if values didn't increase much that the loan would be paid down.

It now turns out that CHC are or have already sold all properties within the fund except the German shopping centre. There is a huge shortfall of values & having paid over €38,000 in interest on the loan arranged for me, there is now at least another €70,000 shortfall in value within the fund itself. Why would anybody sell assets into a depressed market if the rental income was still sufficient to pay interest & a portion of capital?

My accountants buddy is being no help either- and has washed his hands of the whole thing blaming CHC. He should never have put me into this investment with double borrowing (my loan & the borrowing within the fund), he also had no idea what financial position I was in at the time. I have zero paper work on the investment except for the policy document, and CHC have not responded to any of my queries.

Is anyone else in the same situation? What are my options?

I suppose I should count myself lucky as the same accountant tried to get me to buy an apartment in Florida at the same time (he would also set me up the loan) but I found out just in time that he was actually selling the bloody apartments for big commission which he hadn't told me. Would he have received commission from CHC too? How much?

Please take some personal responsibility. Terms like "the same accountants tried to get me to..." is an abdication of responsibility. You were not forced at any stage to act and did so under your own volition.

That said it is a very diffcult situation and unfortunately not many options available. Have you read through the terms of the fund? Did they have any legally binding restrictions on the actions they could take? Some funds set out the criteria under which they can act. If selling all properties was outside this you could have some options (though I doubt this will be the case)

Otherwise have you reviewed your cashflow to check the ability to hang on in there? And is the fund going to buy again (if they missed the big drop they could go in again and increase the rental income)

Personal responsibility? Of course I am personally responsible- I signed the forms, I have paid almost €40,000 in interest to date, and I have no problem with that.

What I do have a problem with is the basis on what I was told pre investment. I had avoided 100s of opportunities from companies to invest in similar type funds however I always baulked as they were showing repayment of borrowings within the fund on an interest only basis- this fund was supposed to be paying down the loan capital, and interest. Effectively I was told that even if values fell they could continue to service the loan and that at some point in the future the entire borrowing would be paid off or the assets would be sold at profit.

Instead of this they have sold off the assets at a loss which makes no sense and left only a property in Germany which is (by the nature of property valuation increases in Germany) unlikely to ever make up the shortfall left in the fund.

I feel that I was advised to invest in a fund that either I or the accountant or both of us did not really understand. I received actaully very little information other than what he told me (stupid of me I know!!), and I am now getting zero satisfaction from any queries raised with either the accountant or CHC. I just fail to see the logic in the way that they are operating the fund and it worries me even more that there is something wrong when they won't even offer me a logical explanantion.

I would be prepared to accept my losses if I could rationalise why/how they occurred.

You worried that funds have gone missing? or sharp practices with selling properties at a loss?

If that is the case have you any way of getting a list of other investors? Does the accountant know some? If more and more people start asking the questions maybe you can get somewhere.

Can alway seek try redress through the www.financialombudsman.ie

Thank you for your post Rob1

I was hoping that perhaps someone on the site may have invested in this fund also so hoepfully they will get in contact as something stinks to high hell......I'm just not sure what it is.

I actually love a bet on a horse and never cry over a loser- what does annoy me is if my horse isn't "off" - so while I am talking through my pocket over this CHC fund it is not just because it has lost money- I have darker suspicions. They may be totally unfounded but in the abscence of responses from the guy who put me into the fund & CHC I cannot rule the posibbility out.

I hear you!

Try the ombudsman - I thought all funds needed regulator approval (maybe wishfull thinking!) so they may know where you can start to track down investors/promoters to get answers to some questions.

Best of luck!

For curiousity I had a look at these peoples website.

some quotes:
"Custom House Capital Limited is regulated by the Financial Regulator as an investment firm under Regulation 6 of the European Communities (Markets in Financial Instruments) Regulations 2007 (MiFID)."

"Our approach is a very personal one. As a client you are assigned your own individual portfolio manager who works closely with you to develop an investment strategy designed to meet your specific and very individual financial goals."

"We offer both an advisory and discretionary service. By opting for a discretionary service you give us the authority to make investment decisions on your behalf, within the parameters agreed with you at the outset. Choosing an advisory service means that you manage your own portfolio and we act as a source of investment advice and as a sounding board for investment decisions."

"Custom House Capital Limited was established in 1997. We currently manage over €1.3 billion worth of assets "

However, then I see that the news part of the site hasn't been updated since June 2009 which begins to smell a bit.

I don't think you can complain if the investments went bad, as thats the nature of investing. If however, you were wrongly advised as to suitable investments for your personal circumstances, then you may have some grounds. However from your query its not clear if you dealt with Custom house yourself and on what basis or if the accountant used them as an execution only service. In the latter case, I expect that your issue would be with the accountant rather than Custom House.

There was a piece about Custom House Capital on yesterdays Liveline show, one of the contributors mentioned a group action that was been taken against CHC.
Does anyone know how to contact this group?

Club Scrub said:

A friend who is an accountant advised me to invest in a Custom House Capital Property Fund a few years ago. At the time I didn't have spare capital so an interest only loan was arranged with BOI UK for €250,000.

...

I suppose I should count myself lucky as the same accountant tried to get me to buy an apartment in Florida at the same time (he would also set me up the loan) but I found out just in time that he was actually selling the bloody apartments for big commission which he hadn't told me.

Click to expand...

Some friend.

You should have run a mile from this geezer.