What happens if BrickVest goes out of business?
The investor participates in a fund (the “Alternative Investment Fund” or “AIF”) managed by BrickVest (the regulated investment manager), overseen by an independent fund depository.
Your investment is isolated from BrickVest’s operations. See more details in our video.
Investors will have a share in the AIF, managed by BrickVest on their behalf, and the sole purpose of the AIF is the investment described in the relevant AIF’s Investment Offering documentation. Investors have a legal right to the income and profit derived from the AIF regardless of BrickVest’s existence.
There is no public market available to trade the investments, and as such there can be no guarantee that a price or any liquidity will exist
The value of your investment may decline and all capital may be lost
Achievement of rental and capital returns will depend on a range of factors including the property asset as well as the wider economy. Past performance is not an indication of future performance, and investors should be aware that they might not recover the amount invested. You should ensure that you understand the effects of exchange rate fluctuations and taxation on your investment return.
Real estate investments can perform in a cyclical way, and values may increase or decrease accordingly. Economic, political and legal issues can affect values as they would other asset classes. Any future downturn in the real estate market could materially adversely affect the value and income generated from a property investment. Investors are to individually assess and establish their level of comfort with this risk from the outset.
Real estate investments featured on BrickVest constitute private transactions. As such, they are not publicly traded on stock exchanges and may not be rapidly sold or traded. Whilst you can advertise your investment for sale to other BrickVest users at any point, the platform provides no guarantee to match your sale with a buyer.
Prior to investing, you should consider the likelihood that you will hold an investment for its full lifecycle, and as such it is a long term investment.
Disposal & unexpected exit
Each investment offering includes a business plan outlining the expected hold period of the property. In the event that market conditions at the time of maturity of the investment are poor, a commercial decision may be taken as to whether to extend the holding period. Any such decision would be taken jointly by BrickVest and the Sponsor, and would be taken only if called for by such market conditions and with the aim of avoiding a property resale value substantially lower than the initial purchase price.
Conversely, an investment may also be sold before maturity if this accelerated sale is deemed by BrickVest IM Ltd. to be in the best interest of all shareholders.
Real Estate and Economic Conditions
The cyclical nature of the real estate industry means it is sensitive to economic conditions both nationally and more locally. These factors can include consumer confidence, employment, income and some others that are considered below.
From time to time, vacancies can be expected to arise in the operation of real estate assets. In some cases, sizable vacancies may mean there is less cash available for distribution to investors.
Tenant default or Bankruptcy
In the event of a tenant failing to meet its obligations to the owner of the property, investors will experience a fall in the cash receipts and cash available for distribution to them. Bankruptcy laws can be used by a tenant at any time for their protection, and this can mean that their lease is terminated and rejected. As a result, the tenant may no longer make any more payments on time, or any payments under its lease at all.
Competition in real estate is prevalent amongst both real estate owners and tenants.
It cannot be guaranteed that there are no environmental liabilities, that no environmental liabilities may at some point occur, that some material environmental condition was made by a previous owner that is unknown to the property owner, or that changes in the future will not mean the property owner will incur liability, for example and without limitation, to changes in environmental laws.
In the case of remedial action whereupon environmentally harmful substances must be removed, the costs associated with doing so may be very high. Further, the value of the Property and/or the property owner’s aggregate assets may be far exceeded by the cost of any required remediation. Failing to carry out the required remediation removal of environmentally hazardous substances may result in it being more difficult for the Company to sell the affected real estate. Additionally, the Company’s ability to use the real estate as collateral to borrow may also be adversely affected.
The management of the Company, provided by the Managing Entity, alongside the Property’s management, will impact the success of the underlying property owner. Should one or more persons from senior management leave, or become inactive, the operations of the Company may be adversely affected.
Cash flow risk
Adequate Company cash for distribution to investors cannot be guaranteed in any given quarter.
Tax risks can be significant, and investors should be wary. When investing, there are different tax rules to take into consideration by each individual investor. Prospective investors are strongly advised to consult with tax professionals as to their specific tax situation, relating to the purchase, ownership and disposition of investments and possible changes in the tax laws or the regulations.
Investors should note that market and currency ups and downs can affect the value of one’s investments, and the income they earn which may rise or fall as a result.
As an international investor it is important to recognise the risk of currency fluctuations alongside other investment risks spelled out herein.