How is this development structured?
When an investor invests into one of our developments, they are investing into a Unit Trust that has been created specifically for that development. Each investor in the trust receives units proportional to the amount of capital they invest ($1,000 equals one unit). A unit is a piece of property that entitles the unit holder to a specified portion of the income and capital of the Trust (as specified in the Trust Deed). The trustee then uses the funds within the trust to undertake the development on behalf of the unit holders.
What are the expected returns?
Expected returns vary per Development based on our feasibility studies. Generally, our variable option targets returns of 30-40% over the Development duration. The exact return to Investors varies depending on the performance of the Development. This option is for investors seeking to gain the best returns possible. We also offer a fixed option which provides Investors a static return of up to 12% per annum regardless of Development performance. This option is perfect for clients who value security and peace of mind.
What is the minimum investment amount?
For investors and projects within Australia, we generally accept any investment over $200,000. The minimum amount may be adjusted at Management’s discretion. Each investor in a Development adds an administrative overhead. Restricting the total number of Investors in a Development reduces administrative work and costs which results in better returns to Investors.
Am I buying a property?
No. You are investing capital into a Unit Trust and you receive returns proportional to the amount of money you invested. The land used for the development is owned by the Unit Trust and the completed properties are sold to purchasers. You do not receive ownership of any of the properties constructed by the Development unless you choose to a buy a property as a separate transaction.
How is my capital secured?
The largest protection offered to investors by our Unit Trust structure is that an investor’s capital is secured against the land that is purchased by the Unit Trust. The Unit Trust owns the land, and the unit holders are entitled to a portion of the trust’s assets based on the number of Units they hold. Another protection is that a trustee owes a duty of care to unit holders and beneficiaries within the Unit Trust and the unit deed mandates that the trustee acts in the best interests of the unit holders and beneficiaries at all times. If a trustee fails to do so, they can be held personally liable with civil and criminal penalties depending on the severity of the their actions.
Is my investment tied to a single Development?
Yes. Each Development has its own Unit Trust, and your capital is put into the Unit Trust. Monies from one Development are not used in other Developments. You may invest in multiple Developments depending on the amount of capital you have to invest and our current availability.
Do your Developments require pre-sales?
Pre-sales are certainly helpful and we endeavour to sell properties as soon as possible, but they are not essential to obtain the funding required to complete the development. The funds we raise from Investors are used to settle the land purchase. Funding for construction is obtained via a loan from a bank or other lender. Obtaining a construction loan is usually straightforward due to the amount of equity that already exists in the Development by the time we need to obtain the construction loan.
How do you sell the Developed properties?
In addition to our trusted sales partners who sell our developed properties, we also maintain an internal Sales division to ensure we fulfil our commitments to investors by selling all properties in a timely manner. We sell our properties in two phases. As soon as we have finalised, approved plans we begin selling off-the-plan. Any properties that are not sold by the time construction completes are sold in a traditional manner.
What happens if the Development fails or Lion goes out of business?
All assets of a Development are owned by the Unit Trust that was created for that particular Development. In the event of a Development failure the Unit Holders can choose to appoint a new trustee to undertake the development or even sell the purchased land to recoup their capital and exit the investment. These decisions are made by a vote involving all Unit Holders requiring a majority decision for a vote to pass.
What happens if the development is delayed?
All investments have an element of risk; for property development one of these risks is the possibility of the project being delayed. We cannot fully alleviate the possibility of a Development running over schedule as some factors (such as Council approval and construction) are outside of our direct control. However, this is where our experience and strategies for risk mitigation come into play. Our practical experience from managing sixteen Developments has taught us realistic timeframes for each stage of the development as well as likely obstacles that may arise. Outside of our own experience, we also utilise the services of trusted external experts such as town planners and construction managers to assist where required and provide realistic timeframes. We also provide our Investors with regular updates on the progress of all Developments via email and a private Facebook group. In the event that a Development is delayed we will endeavour to provide an equivalent return for the extended duration so that an Investor’s annualised ROI remains the same.
How do you know a Development will be profitable?
We can never be certain that a Development will be profitable; all investments have an element of risk. However, before proceeding with any development we conduct a thorough feasibility study to ensure that the site meets our criteria and standards. We also obtain an independent valuation from CBRE during the design phase based on comparable property sales to ensure that our expected sales prices and subsequent calculations are realistic. We also add a contingency into the budget, typically 5% but varying based on the level of risk involved in the Development, to ensure that the Development will be completed.
How do you make money when the property market is weak?
Unlike a traditional buy-and-hold property investment strategy, our ability to achieve a profit as a Developer is not inherently tied to market performance; as long as the combined sales price of the developed properties is higher than the cost to build them, we still achieve a profit. There are a variety of factors other than final sales price that also influence how much profit a particular development will generate, such as the purchase price of the land, construction costs, and loan interest. This allows us to achieve a profit from the lucrative property market without being completely dependent on the performance of the market.
What is your historical performance?
Our first Development (completed while operating as Investments Squared Pty Ltd) delivered a 32.5% return over a 30 month investment term, which is an annual return-on-investment of 13%. This Development, called Aspire, involved a capital raise of $1,000,000 and delivered five townhouses to market.
Our second Development, The Precedent, settled in October 2018. The Precedent involved a capital raise of AU$1,000,000 to build six townhouses. This Development delivered a return of 42.5% over a 37 month duration, resulting in an annual return-on-investment of 13.7%. Despite experiencing a delay in the construction of this Development, to ensure we fulfilled our commitment to investors we provided them with an annualised percentage equivalent to the initial offering to ensure that their ROI was not impacted.
How have you started so many Developments since the company launched?
Lion Property Group has only existed since May 2018 but our team have been managing Developments since 2015, formerly operating as Investments Squared Pty Ltd. In early 2018, the three Directors of Lion Property Group became equal owners of Investments Squared Pty Ltd. In May 2018 Lion Property Group was incorporated, and Investments Squared Pty Ltd, along with all of its assets, became a subsidiary of the newly founded Lion Property Group Pty Ltd. The acquisition of Investments Squared provided Lion Property Group with over 130 active investors, close to AU$30 million in managed funds, thirteen active Developments, and a gross realisation value of AU$130 million. From May 2018 to December 2018 we completed one Development and launched two more, bringing the total at the end of 2018 to two completed Developments and fourteen active Developments.
Can I use my SMSF to invest?
Yes. SMSFs can be used to invest in Unit Trusts, and most of our Developments are structured as Unit Trusts. To ensure that your SMSF investment is compliant with ATO regulations, we recommend engaging the services of licensed professionals to assist if you have not already done so.
Who is your typical Investor?
Our Investor community is a diverse group of Australian and international investors united by their need for a reliable investment model that provides them financial freedom and flexibility. At the start of 2019, our Investor community consists of over two hundred active investors.
This seems too good to be true.
Our offers are genuine and we have a proven track record. Our latest Development to complete is called The Precedent. Here’s a playlist of videos showcasing the completed properties and our investor’s thoughts and experiences.
The companies of Lion Property Group are registered with the Australian Securities & Investments Commission (ASIC) to ensure we are acting in accordance with Australian Law. Please note, in the past other companies have operated under the same name. Our organisation, nor any of its employees, are in any way affiliated with previous entities operating under the same name. Our ABN is 625 889 367 and our ACN is 13 625 889 367, which can be used to differentiate us from previous entities.