£20,000,000 of residential assets purchased in 3 years
With our most recent acquisition, 67 Clapham Road, the BondCap Portfolio has broken through the £20m milestone. Eight freeholds, comprising 42 apartments purchased in just 36 months.
BondCap was created in 2019, to retain one apartment at our Noel Road development in Islington. If someone had told us then what BondCap might achieve within three years, it would have been a struggle to believe it. It just goes to show, often starting something is the most important step… once you’ve started things can snowball.
Investment Growth
When setting up Gower Capital a decade ago, the focus was to be a ‘developer’. Having since spent considerable time analysing and comparing investment and development, there are many strengths to our growing investment model.
Speed of return-
When purchasing an attractive period building in London at a true discount of 25%, there is a (retained) profit on day one. Whereas, on a development project, if all goes to plan the aim is for a 25% profit at the end of an 18-month term. As any developer knows, an awful lot can change in 18 months. Including but not limited to: build costs, interest costs and exit prices, essentially the whole deal can be in flux. What’s more, with local authorities often under resourced, planning delays are very common. It’s fair to say, there can be a broader range of significant risks in development.
Income stream-
With investment deals, we typically also have an income stream from day one, or soon after once tenants have been found. With rental income nearly always over and above the debt service costs, there is positive cash flow.
Capital efficiency-
Investment deals can be capital intensive, traditionally requiring large deposits, stamp duty and fees upfront. Over the last three years, we have worked with banks to radically improve our capital efficiency.
This has been achieved by arranging bespoke funding to leverage against overall value and not solely against yield or purchase price.
As the track record grows with each successful deal, BondCap now enjoys the support of several private banks and niche lenders.
Without raising external funds, this has facilitated BondCap going on the run of deals it has enjoyed over the last three years.
The Vision
Through hard work and dedication, in tandem with my colleague Nicholas Singleton, we have transformed BondCap from a company which owned one apartment into a sophisticated investment firm, but this is just the start.
Going forward, we now plan to significantly scale the investment side of the business. Having broken through £20m, the next milestone is £50m AUM, and then beyond that £100m AUM. For all the talk of goals, we appreciate and understand the journey is the fun part.