Frequently asked questions

What is evolve?

evolve Fund Services Limited is a London based business formed to facilitate access to commercial and residential property investments and businesses backed with commercial and residential property for private investors with in excess of £25,000 to to invest. evolve concentrates on opportunities that are likely to deliver attractive performance within carefully planned structures, but with a lack of volatility. Opportunities are thus often very suitable for pension investors. To date more than 530 sophisticated private investors have invested in evolve generated opportunities. As at the start of 2008, evolve has helped with the investment of circa £41 million of equity within syndicates in commercial property investments, with a substantial proportion coming from SIPP and SSAS pension funds.

Who are the Directors of evolve?

Simon Hawley is a founding Director of evolve.
Simon has been qualified as a Chartered Surveyor for 21 years and has 19 years experience as a commercial property fund manager. Between 1989 and 2000 Simon worked within the Lloyds TSB Group for Abbey Life, Hill Samuel Asset Management and Scottish Widows.

He was the Investment Director in charge of the Lloyds TSB Property Pension Funds (No 1 and No 2) (circa £800m) and was responsible for property funds under management in London and the South East for Hill Samuel (circa £1.2 billion).

Hugh Colville is a founding Director of evolve.
Hugh has been qualified as a Chartered Surveyor for 17 years. Up until 2000 Hugh was a Director of FPDSavills within its' commercial property investment department.

He has considerable experience within the property market having worked with all sub- sectors advising institutional funds, property and development companies and private individuals.

Hugh's particular expertise lies within the retail, leisure, office, hotel and industrial sectors.

Why invest in property assets and businesses backed with property assets?
evolve believes there are three main reasons for private investors to consider investments of this type. The commercial property market in general displays a lack of volatility, investments in this sector can generate attractive performance, and the investments are very suitable for a longer term pension fund approach. Other reasons may include the fact that the investment is a tangible real asset with a trophy factor, it can be re-let if a tenant's lease comes to an end for whatever reason, that the asset can generate a steady income stream, or tax benefits may arise from careful planning.

How has property performed in recent years?
We await the latest Investment Property Databank All Property performance for the period up to December 2007. Historic figures illustrate how attractive the performance has been both in the shorter and longer terms whilst emphasising the lack of volatility in the sector. It is also worth highlighting that reported market returns were achieved without any gearing. Investors should note that evolve regards the performance of property in the past two to three years as abnormally high, and largely driven by weight of investor money attracted to the sector. evolve does not expect this level of return to be repeated in the near future, and evolve concentrates on those property assets in the better locations where there is an underlying excess of demand over supply at an occupational level, with a view to generating stable returns of at least 8 to 10% per annum over the medium to longer term.

 

How long is the investment tied up for? 
It is an accepted fact that property investment is a relatively illiquid form of investment. In addition purchase costs such as stamp duty can be high and thus it is rarely worthwhile viewing the investment with a short-term time frame as the returns over a short period of time are rarely attractive without taking unnecessary risks. Investors in property and businesses backed with property assets tend to adopt a medium to longer-term approach to gain optimum returns from their investment. evolve usually acquires properties whilst adopting a 7 to 10 year business plan. Investors that seek to sell their units or shares by private treaty are unlikely to gain satisfactory results unless they look to retain their investment for the full business plan period. Pension fund investors often have similar longer-term investment horizons. There may of course be an opportunity for the property investment to be sold at an earlier date.

   

What happens if an investor is desperate to sell his/her units?
Although there is no established market for interests in funds, syndicates, collective investment schemes or unlisted shares, any investor that seeks to sell an interest prior to the investment's maturity will be able to contact evolve or the Fund Operator, a regulated business that deals with all the regulatory aspects of the vehicle, partnership or trust. The interest will initially be offered at market value to other investors in the fund, and afterwards to outside investors. A sale cannot be guaranteed but the quality of the investment may mitigate liquidity concerns. 

   

How is each opportunity structured and operated?
The ownership structure can vary according to the objectives of the investment. It is often a Limited Partnership (or a Limited Liability Partnership for a trading concern) with each tax paying investor a partner in the partnership. One of the partners will be a Trustee of an Exempt Property Unit Trust. The partnership is operated by a regulated business with evolve forming a General Partner (or designated member in the case of a LLP) to conduct the business of the partnership in accordance with a set business plan. The controlling partner then instructs evolve to perform asset management functions with an emphasis on both protecting and enhancing the value of the investment or the business as the case may be. The investors in the vehicle do not participate in the day-to-day business of the vehicle but ultimately they have complete control over strategic issues. The structure is often entirely tax transparent such that there is no taxation within the vehicle and accordingly each investor is responsible for his or her own tax affairs. The regulated operator furnishes each investor with a statement at the end of each tax year.

When are such opportunities available?
An Information Memorandum for each Fund is circulated when evolve agrees terms to acquire a suitable property investment or prior to the establishment of the business. Applications will normally need to be submitted via an investor's financial adviser within a 3 to 6 week period from receipt of an Information Memorandum. Money transfers to the Fund's solicitor's client account or the Fund's account are required within a further month or two. evolve only prepares an Information Memorandum when a suitable transaction has been identified or when a particular business is to be formed and thus the supply of opportunities tends to be irregular. Investors should note that the promotion and operation of such opportunities is regulated by the FSA with strict rules controlling the preparation, accuracy of information and distribution of Information Memoranda.

What type of debt is utilised?
It is the vehicle that borrows from a suitable institutional lender. Bank of Scotland, The Royal Bank of Scotland, Deutsche Bank, Clydesdale Bank and Bristol & West have been participants in previous transactions. The loan is arranged on a non-recourse basis thus limiting the investor's exposure solely to the equity invested. An investor can choose to take on a greater liability to protect his or her original equity. Investors should note that as the vehicle borrows from the lender, SIPP or SSAS pension investors are in fact investing indirectly in property thus enabling a greater level of gearing than may be permitted in a direct route.

What paperwork is involved? 
evolve sources the opportunity, prepares the Information Memorandum (which is then checked and verified by the regulated promoter and operator), arranges the debt and Fund formation, and manages the experienced professional team that represents the Fund in the purchase of any property investment. The investor will be required to fill in an application form that is attached to the back of the Information Memorandum. The form requires the investor's adviser to complete some money laundering checks. In addition investors in the vehicle are required to sign a power of attorney that enables the operator or Fund to sign documents on their behalf strictly where connected to the set business plan. Once the Fund is closed the investors receive copy partnership or trust documentation, and thereafter regular reports from the operator and asset manager (usually once a year unless important issues need to be reported). Investors are invited to attend annual meetings and may contact the evolve Directors at any time to discuss property issues. The process is designed to leave the day to day business decisions from purchase to sale or refinance in the hands of experienced professionals, with strategic decision making such as whether to sell the asset, redevelop, settle a rent review etc. in the hands of the investors typically with a 75% majority required at a vote.