[Note: due to a copyright claim, the logo above is an original approximation of Signature Capital’s logo, and not its own.]
Signature Capital offers a range of unregulated property investments.
As at March 2019, these investments included an investment in the Dixie Dean Hotel paying 12% over 12 months, and an investment in The Signature Flotel paying 12% over 12 months (with a higher minimum investment).
I have seen an email detailing a further investment in the Martins Bank project paying 10% per year for investments between £15k and £45k, rising to 16% per year for investments of over £250,000.
Signature Capital frequently changes the individual properties on which its investments are based. However the interest rates above are typical of their offerings, based on previous offerings which are now “sold out”.
Who are Signature Capital?
Signature Capital is headed by Lawrence Kenright, who is director of 56 active UK companies at time of writing. The “top company” is described as Signature Living Hotel.
Signature Living Hotel is currently a month overdue with its Companies House accounts, as are a total of 20 other Signature Capital companies at time of writing.
The March 2017 accounts of Signature Living Hotel (which are now two years old) show net liabilities of £11 million on total assets of £74 million.
Up to date accounts are essential for due diligence. Anyone considering investing will need up to date audited accounts for Signature Capital (or the specific company borrowing money from them) – just as a starting point.
How safe is the investment?
Signature Capital promotes itself via a testimonial from Hong Kong rugby player who Tyler Spitz who describes the investment as “fantastic returns in a secure environment” and “a safe place”.
I’m getting fantastic returns in a secure environment. It didn’t take me long to realise my money is in a safe place and that I was going to get great returns on my investment.
[Marketing material published on Signature’s website as at the publication date of this article. Emphasis as per original.]
This is a misleading description of Signature Capital’s investments which are inherently a very high risk investment, being a loan to an unlisted company bearing rates in the region of 10% per year.
The fact that Signature Capital offers a fixed return to investors means these investments are in Signature Capital itself, not just in property.
Loans secured against property are not risk-free as there is a risk that if the underlying borrower defaults, the security cannot be sold for enough to cover the loan.
Investors in asset-backed loans have been known to lose 100% of their money when it turned out that there were not enough assets left to pay investors after paying the insolvency administrator (who always stands first in the queue).
We are not in any sense implying that the same will happen to investors in Signature Capital only illustrating the risk that is inherent in any loan note even when it is a secured loan.
If investors wish to mitigate this risk, it is essential that they hire professional due diligence specialists (working for themselves, not Signature Capital) to confirm that in the event of a default, the assets of Signature Capital – or the specific company borrowing money from them – would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Signature Capital tells them about their assets.
Signature Capital’s literature is big on financially irrelevant statistics like the occupancy rate of its hotels or the square metrage of its assets. The occupancy rate of a hotel, by itself, tells you nothing about how profitable the business is and by extension how likely it is to be able to pay up to 16% per year to lenders.
Should I invest in Signature Capital?
This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.
As with any individual loan note to an unlisted company, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk up to 100% loss of their money.
Any investment offering returns of up to 16% is inherently extremely high risk. As an individual, illiquid security with a risk of total and permanent loss, Signature Capital’s loan notes are much higher risk than a mainstream diversified stockmarket fund.
Before investing investors should ask themselves:
- How would I feel if the investment defaulted and I lost 100% of my money?
- Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
- Have I conducted due diligence to ensure the asset-backed security can be relied on?
The investment may be suitable for high net worth and sophisticated investors who will already be well aware of all of the above risks, are looking to invest a small part of their assets in corporate lending, have done sufficient due diligence, and feel that the return on offer is sufficient for the risks involved in lending to a small company.
If you are looking for a “safe” or “secure” investment, you should not invest in corporate loans with a risk of 100% loss.