Six German Retail Properties - the Louis Group International ...

ank finance
Leverage
This property investment allows for 80% bank leverage
on the property purchase prices and 73% bank leverage
on the total acquisition costs (as outlined under the
category "Finances"), without the inherent risks to the
investor. The investor is not personally liable in any manner
for the bank finance, as Louis Group International Holdings
Ltd has made suitable arrangements with the financing
institution to exclude any liability to the investor.
Leverage is the principle employed as one of the optimal
ways to make capital grow faster than the rate of inflation.
Leverage involves the utilization of bank finance in order
to help the investor increase the size of their stake in a
property, by allowing them enhanced capital growth with
the greatest after tax income. There are tax benefits and
increased capital profit that can be achieved from
incorporating leverage in a property investment.
Leveraging has inherent risks described under Investment
Risks.
Non-Recourse Loan
We will obtain a mortgage loans from Barclays Bank and
Royal Bank of Scotland for a total sum in the order of
74% of the property acquisition costs.
If Louis Group on behalf of the Investment Company is
able to secure greater leverage either now or in the future,
then the Investment Company will exercise this option
and utilize any excess funds in its discretion to redeem
shareholder loans.
The non-recourse nature of the bank loan will effectively
reduce the risks associated with the property investment
since, in the unlikely event of tenant failure and / or
collapse in commercial property values and / or any
unforeseen circumstances, the lending banks' recourse
is not to the investor but only to the property and such
other arrangements as the company has made with the
Bank and Louis Group International Holdings Ltd.
properties germany
Therefore, if the property falls in value, exposure would
be limited to the extent of the investors initial cash
investment.
Finance Interest
The terms of the bank loans are that the debt and interest
will be repaid over approximately a 20 year amortization
schedule, with a hedging instrument to the banks
satisfaction.
The interest rate applicable on the loans is the 3 month
Euribor plus a 1% banker's margin. Take note that this
rate excludes the additional costs associated with the
hedging instrument which is a requirement in terms of
the bank loans.
Generally the interest payable on the bank loans can, for
tax purposes, be offset against the rental income from
the property. Without this offset, income tax would be
payable on all of the rental income.
Private Placement Memorandum Six German Retail Properties
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