Facts & Figures of Brendan Investments (Hobbs Dobs)

democrates

Boardsies, can we keep the answers in this thread to information with verifiable sources as much as possible please.

Here's the site:
http://www.brendaninvestments.ie/

The Prospectus, Brochure, and Application page has PDF's for download with a lot of good information.

Highlights:

• Investment Minimum €5,000 Maximum €200,000
• No Entry Fees or Promoter Charges
• 7-10 Year term planned
• Application deadline 31 October 2007
• Pension Funds can invest
• NIB are mentioned as running a scheme where you can borrow to invest in this
• 20% tax on returns is typical but it depends on your personal tax situation
• Believe they could exceed 16% best commercial property syndicate returns
• €50m - €250m investor equity to be raised
• 75% gearing (borrowings) making the fund €200m to €1bn
• 25% (re)invested in develop/sell projects in Portugal/Ireland/UK
• 75% invested in rental properties, minimum of 5% net yield in UK/Germany

Obviously they can't predict the future so the plan may need to be changed and the company is set up with that flexibility. There's a lot more detail in the prospectus including accounts, T&C's of the offer etc.

Any opinions?

• Circa €750,000 in Set Up Costs
• 1%pa + VAT(where applicable) Charge on Gross Asset Value
• Performance bonus of 20% of returns in excess of 8% pa
• Early Exit after two years where buyer can be matched with seller in Grey Market
• There will be additional fees for Management Expenses and External Advisors
• Does not form part of 'Investor Compensation Scheme' (few of these do)

democrates

Of the 75% to be invested in Germany and Portugal, "about 60%" is earmarked for Germany, leaving about 15% in Portugal - "the Algarve, that Formula 1 area".

The up to €250m to be raised is the legal max for the prospectus as it stands.

On the management bonus, if 8% roi is achieved he said that it means they won't get anything unless you double your money in ten years. The "Rule of 72" however indicates that the bar is slightly higher.
A 7.2% net annual roi compounded is enough to double your money in 10 years.
The 8% they have set for themselves will double your money in 9 years.

democrates

Recall the eircom buyout where small shareholders were forced to sell at a loss and a string of new owners cashed in, could that or something similar happen with Brendan Investments?

The prospectus or brochure mentions it's possible it could go IPO, though that is not an intention at this time. While that could be a good option to have on the table in the end to maximise returns, I'd be very wary of it otherwise.

If it went IPO mid-way and a big entity or consortium got in, they'd want to buy it on the cheap eg at a downturn in the property market, and force the rest of us out before the anticipated high return phase.

An independant valuation of the going concern might not help, it would be in a predators interest to entreat the board to artificially suppress the value of the company eg don't maintain properties or similar artifice, besides, best guesses of rising future property values won't figure, the prudence principle must suppress them.

Does the prospectus guarantee our interests remain prime, or are we trusting the board not to sell us out for a sweeter deal from a predatory buyer, eg better bonuses and/or to join them in the buyout?

My lay grasp is that as shareholders we'd have final say in a vote whether or not to go IPO, so we could reject that or take the chance. I'm not a lawyer like most punters looking at this, it would be great to hear some opinions from people who know about these things. Ideally we can establish some facts about this from the prospectus and the moa and aoa of the company.