Property investment through CIBA plc - an associate company

CIBA plc was originally incorporated in 1994. The directors of the company all have extensive property experience or are well recognised in their particular fields. The directors include:

Norman E Aronsohn
Simon S Aronsohn - MA(CANTAB)
Paul Boyd
David F Le Quesne - LLB
Peter J Sherratt

The Group is trading successfully and has joint funding arrangements with two Swiss investment trusts. The availability of funds is not currently a problem.

The Proposal

Our expertise is the purchase of property at a reasonable price adding value either through site assembly and/or through change of permitted use through grant of a new planning permission thereafter selling the sites with such added value. By arrangement, projects can be built out to completion and/or refurbished but this causes uncertainties both as regards to time and therefore realisable value. The sale of residential or commercial units or a site with planning consent is of course dependent upon the property market at the time of disposal. Building out can create far greater returns on one`s investment but is subject to greater risk.

Investment Proposal

Investment of a minimum of £1m which may be increased by increments of up to £100,000. The maximum acceptable would be £10m unless specific schemes were discussed in advance.

Due to the nature of the property market, money would need to be deposited in the UK or be available for draw-down within a short period. We would require proof of the availability of funds as we do not wish to waste time. It would be proposed that sites are identified, interest expressed by the joint venture vehicle and thereafter preliminary feasibilities produced. These would be provided to the potential investor who could then make a decision as to whether the project is something in which he is wishes to invest. Such decision must be made within seven days of provision of the details. This is because the market is currently very buoyant and a longer period could mean losing the opportunity.

The properties/sites would focus on industrial properties in emerging areas, buildings requiring refurbishment, assembly of sites where by joining three or four planned holdings the total package with planning consent achieves a major increase in value.

The Term

CIBA would work on open book accounting through the joint venture subsidiary. A separate company will be created for each project and/or fund of a client and CIBA as a sign of their commitment to the project could themselves invest 10%.

90% of the funds for any project would be provided by the investor who would achieve a rate of return in the region of 3% above Barclays base rate (currently 6%) on the monies invested interest would be rolled up and payable at the completion or sale of the development. In addition any investor would earn 50% of the net earnings on the development or refurbishment undertaken. It would be the intention of CIBA to look at projects where returns could be achieved within a 12/18 month period or such other period as maybe agreed between the parties.

Examples of previous schemes are appended to this note.

Aims of the Investor?

In terms of investment and/or development the different aims of any investor are of paramount importance in deciding which schemes to propose.

  • If an investor is looking for an income as well as a capital return the intention would be to refurbish/develop and thereafter let at a market rate on long leases. The development element has some uncertainty but most proposals can be completed within an 8/12 month period depending upon complexity. On a worst case scenario no investment will be proposed showing an annual return of less than 12-15%.
  • Development schemes can be proposed which would envisage a capital return within 12/18months. This would involve the onward sale of a development opportunity with an improved planning consent obtained.
  • If the refurbishment route is chosen together with obtaining of new or revised planning consent, the period for the investment may increase to 18/24 months but returns would be more dependent on the market.

The property market does vary and there can be no guarantee of a substantial return. The expertise of those people involved should ensure that properties were purchased at the right price and for large schemes opportunities for covering costs of money though alternative solutions are always identified. This "worst case" scenario would mean that if there is a proposal for an industrial complex, it would be expected that short term leasing could be put in place to ensure that the major costs of borrowing were covered pending the satisfactory outcome of any planning applications.


1. Augusta Building, Warstone Lane, The Jewellery Quarter, Birmingham.

CIBA together with joint venture partners purchased a former factory in what was to become the main emerging residential area of Birmingham. The factory was not operational and the local authority were keen to see the premises redeveloped.

The shape of the premises shown on attached plans appeared suitable for splitting up refurbishment.

A planning application was submitted for a mixed use development of apartments, town houses, retail space, restaurant and terrace and car parking spaces. Consent was eventually granted for 70 apartments, 6 three storey two bedroomed houses, 403 sq.m. of retail, 344 sq. m. of bar/restaurant with 150 sq. m. terrace together with 81 car parking spaces.

The site was eventually sold for £2.45m showing a net profit of over £1.1m within a 19 month period.

2. Tooley Street, Southwark, London SE1.

In 1996 CIBA through a joint venture company purchased a two and a half storey former bakery in Tooley Street, London.

Nothing was done in relation to the property for a period of two and a half years whilst it was still occupied. In late 1998/1999 an application commenced for planning consent which took over 18 months to obtain planning consent for a mixed use development including 6000 sq.f. of offices and 14 apartments.

The site was originally purchased for £450,000 and expenses in the region of £300,000 were incurred.

The property was eventually sold unconditionally prior to the receipt of planning consent and was conservatively valued by agents at £2.2m with planning.

The sale price achieved was £2.4m showing a profit in excess of £1.4m in a 24 month period.

3. Pportunities exist with properties for sale for £5/600,000 making a profit of 20-30% within a relatively short period. These are a matter of having the contacts and taking over a deal when someone is in trouble or needs funds.

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