Our Model
THE CONVIVIA MODEL
All of the Group’s acquisitions and development will be completely asset backed. All assets of the Group will be acquired at, or under market value on day one to lock in value, together with additional protection for investors. Acquisitions will be made with the benefit of independent, recognised surveyors who will ensure that the relevant asset is being acquired for value. They will also assess likely end values post development. Where possible, the Group will seek to enhance value further by adjusting or adding to planning applications whilst ensuring that planning risks are mitigated. All construction spend on the building will be monitored independently by recognised monitoring surveyors to ensure that every unit of development spend is accredited to furthering the build and enhancing the value further. On completion of the building, the developed value will be greater than the total spend. Please note that asset backing does not guarantee return.
PROCUREMENT LEVERAGE
Notwithstanding the ability to deploy, the Group’s model will enable it to make deals which are commercially viable where others cannot, due to the Group’s unique construction procurement method (“CPM”). The Group’s procurement team is highly experienced in procuring materials from around the world. This should enable the group to source materials of a high quality and specification, for lower than UK trade cost and will enable the Group to provide above par specification and build.
The Group’s unique procurement method and capability to save costs without compromising build quality enables it to remove the focus from delivering as many units as possible per development, to dedicating floor space to communal areas that will create cultural change in the way people live and socialise together within its buildings.
A truly innovative concept for industry, the Group’s focus on conviviality will not only drive unique design and development, but will attract end users through brand experience alone following completion.
CONVIVIALITY
The Group has a clear vision to build and develop a solid and innovative property and brand portfolio with Conviviality at its core. Through clever design, we will transform how people live and socialise by creating spaces that encourage users to come together and enjoy both the space and technology available.
The “Convivia” concept will apply in different spheres from aparthotels to social housing offerings. The décor, design and amenities will be specifically designed to promote a sense of fun whilst equally lending themselves positively to a sense general well-being.
The Group aims to carefully consider and design its technology to promote the user’s experience before, during and beyond their stay at the Group’s buildings. Where possible, the Group will use online technology to promote offline users’ experience. Due to Convivia procurement methods (“CPM”), the Group’s technology offering will be inherent throughout the buildings at an elevated level.
CONTROLLED EXITS
Once any development is completed, it is intended that the asset will be refinanced out to third party lenders by way of term loans to facilitate the interest and principal repayments to the Bondholders. This should enable the group not to be reliant on buyers to exit Bondholders on a timeline beyond its control.
By developing an operating company (“Opco”) / property company (“Propco”) structure, the refinancing will be assisted by Propco granting a long lease to the Group’s Opcos. The Group is in the process of developing strong and reputable Opcos to fulfil the role of leasees. The stronger the Opco, the greater the strength of covenant ultimately impacting on the value of the lease once capitalised.
Whilst the Group can utilise third party established covenants for the social housing offering, the Group aims to become a registered social landlord or Housing Association enabling it to more firmly control the exit route.
Insofar as the apart-hotels and the “Convivia R” brand are concerned, the Group has been in discussions with Interstate, the international well renowned hotel operator with regard to the management of the buildings in part or whole by Interstate, under the Convivia name.
Regardless of the Opco function, the Convivia values and philosophy will remain through the design and development of the building through to the delivery of the service.
ABILITY TO DEPLOY
The two-prong aparthotel and social model is designed to enable the Group to take advantage of many UK development opportunities that arise. It will afford the Group the flexibility to deploy in both luxurious as well as the more deprived areas. This model will provide an outlet whether coastal, inner city, busy town, under-generated and within well-established areas. This will allow for development of a robust pipeline for the Group to selectively acquire the most desirable assets through numerous smaller transactions (so called “cherry- picking”) and therefore enabling the Group to deploy capital in an effective manner. Acquisitions of properties will follow a strict procedure based on established criteria and appropriate commercial, financial, tax, legal and technical diligence. In the acquisition process, the Group will aim to exploit the market knowledge and combined years of experience in the real estate sector of its Management Team. Please note past experience is not a reliable indicator of future results and does not guarantee that all capital and/or interest will be repaid.
CONTROLLED VALUE ADD
The Group does not rely on market appreciation to create value, but instead engineers value by delivering long-term income to its Propco through the creation of its Opcos. The strength of the Opcos determine the value-add on the Group’s sites. By creating long-term leases, guaranteed income yield should be locked in for its Propco.
As the Group’s build costs will aim to be typically be lower than UK market, its financial targets may be more easily met than most. Rather than take the benefit of cost savings as additional developer profit, the Group will instead use the financial headroom to create additional and experiential value for the user by creating (non-yielding) communal space. The Group will be able to carve out large expanses of building footprint dedicated to this end, without impacting on its financial targets. This will enable the Group to deliver desirable and unique buildings true to the philosophy in delivering experiential living, innovative tech and enhanced specification. This will ultimately impact on the brand strength and underlying Opco covenant
OPCO / PROPCO
The Group’s buildings will be designed and purpose built ‘by us, for us’ with our operations in mind, setting us apart from the majority of competitors.
The Group’s intention is to create two Opcos: one being the “Convivia R” to manage the apartment hotels and the second to manage the social housing aspect of the business. As the Group’s Opcos are intended to be the custodians of the buildings (operating with the benefit of full repairing FRI leases), by delivering a superior quality offering of build, the Group will reduce the amount of capital expenditure required to maintain the upkeep of the structure. Enhanced quality material will be used behind the walls as much as for parts that are immediately visible, in line with the Group’s high specification approach to enhance the user experience and define the brand.
SOCIAL HOUSING
In the property development sector, ‘social housing’ occupies a space of its own. Typically, this is synonymous with ‘entry level’ standard, or the minimum standard permissible whilst remaining acceptable. Based on CPM, the Group will be able to go far beyond the ‘acceptable’ level and deliver exceptional quality. As an example, triple glazing will feature in the Group’s social offering and insulated waste pipes to reduce noise pollution as part of the specification offering.
CPM will enable the Group to create exceptional communal space designed to enhance the user’s experience for all, ranging from children to adults. The “Convivia” concept will feature at the core of promoting community.
The Group’s approach to social housing is defendable in that it will deliver parity of housing for the state assisted, underpinned by a belief that everybody deserves quality accommodation.
APARTMENT HOTELS
Short term residential lets are becoming highly desirable as an alternative to traditional hotels with the emergence of Airbnb. The Group is focused on creating a purpose-built apartment hotel brand offering, which will deliver community experience to a recognised and uniformed ‘gold standard’. That standard will be delivered around the “Convivia” concept.