Advice on investment gone awry

[Brendan Burgess]

it says they're signing up to 25 year leases!

My understanding is that they acquired these houses and let them to local authorities.
The plan was then to sell the lot as a financial asset and repay the funders.

They might not sell them for more than they paid for them. And they might have to pay other funders first. So I would guess that these loan notes are very high risk.

 

[Luternau]

No return until properties are sold is my take on it too. I don't see a wind up/exit in 24 months as per OP.

Meanwhile all the rent (that is without the burden of repairs) is going elsewhere. The company or vehicle behind it has no incentive to sell the properties while they have this guaranteed income.

Its not very liquid. The investors (in the loan notes) have no say in when they are sold.

 

[Brendan Burgess]

Generally in these types of investments, there is some sort of senior lender and these loan notes are effectively junior or subordinated.

So let's say they acquire €30m worth of houses.
AIB provides €25m secured on the properties.
The loan note of €5m comes next.
The shareholders/promoters get whatever is left.

If the houses are sold for €35m, everyone gets paid and the shareholders do very well.
If the houses are sold for €25m, AIB gets paid in full, and the loan note holders lose their entire investment.

 

[Bronte]

No idea what a Loan Note is so I googled:

Loan Notes Definition | Legal Glossary | LexisNexis

The financial instruments which evidence the existence of a debt between a borrower (issuer) and one or more lenders (noteholder(s)) and the promise by the

www.lexisnexis.co.uk

The financial instruments which evidence the existence of a debt between a borrower (issuer) and one or more lenders (noteholder(s)) and the promise by the issuer to repay the amounts outstanding under the loan notes to the noteholder(s).
Also commonly known as loan stock, loan notes constitute a type of debt security which entitles the holder to payment of principal and interest in accordance with the terms of the loan note instrument. In the context of a share purchase transaction, loan notes may be issued to the seller by the buyer in whole or part payment of the purchase price by way of deferred consideration as an alternative to cash.

 

[Bronte]

The investment vehicle is called Redi Resi.

Is it this company? (Trying to figure out who they are and what they invest in, and these have some kind of Irish component)

Redi Resi Cedar Housing Affordable Housing Partnership | LinkedIn

Redi Resi Cedar Housing Affordable Housing Partnership | 2 followers on LinkedIn. RediResi is a rented residential real estate platform specialising in the United Kingdom and Ireland. | RediResi is a rented residential real estate platform specialising in the United Kingdom and Ireland. To...

uk.linkedin.com

RediResi is a rented residential real estate platform specialising in the United Kingdom and Ireland. To date, the company has been active in the build to rent sector including social housing and private schemes. RediResi is committed to working together with local authorities, housing associations, private developers, and institutional investors.

Or possible is it this type of investment:

https://lawlorburns.com/lawlor-burns-associates-appointed-by-rediresi-icorp-for-long-term-social-housing-leasing-projects/
pleased to announce our appointment by RediResi Icorp to provide full https://lawlorburns.com/project-management/ (Project Management), https://lawlorburns.com/quantity-surveyors/ (Quantity Surveying) and https://lawlorburns.com/construction-management/ (Construction Management) services for their long term social housing leasing projects in the Republic of Ireland.

RediResi have secured funding of €91,000,000.00 from their funding partners NatWest Markets PLC and the global investment boutique Alvarium Investments to procure and refurbish up to circa 500 turnkey units nationwide for long term leasing by the country’s Local Authorities.

This is the first of three phases and RediResi have targeted providing in excess of 2,000 additional social housing units through long term leasing over the next 2 years. The Long Term Social Housing Leasing Scheme is a pillar part of the government’s plan to supply 50,000 social housing homes before the end of 2021.

The refurbishment of the first 51 units is commencing on site in February for South Dublin and Fingal County Councils.