Description
WECITY complies with Law 5/2015 and with Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European providers of crowdfunding services for companies. It is authorized by the CNMV as a Participatory Financing Platform registered under number 30, with a favorable proposal from the Bank of Spain.
Promugal Unipessoal Lda, requests financing from wecity for this investment opportunity. Investor, before making your investment please read the basic information for the investor client.
Skin in the game: “In compliance with Article 8.2 of Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European providers of equity financing, we hereby inform you that partners, managers and employees of wecity may invest in this opportunity. These investments will be made under the same conditions as those of other investors without receiving preferential treatment or privileged access to information.”
The investment
The investment opportunity consists of financing the completion costs (currently 70% completed) of a luxury villa located in Lugar de Zimbreiros, Tábua, Ribeira Brava, Madeira Island, Portugal. The plot has an approximate area of 1,657m2 and has a total gross construction area of 415m2, of which 175m2 above ground.
The developer has already committed €709,000 of its own funds to the project. As a guarantee, the developer is providing two of the three homes in the development; the first one, already completed and valued at €2,850,000, and the second one, which is the one for which the financing is needed, and which in its current state is valued at €2,078,926. In total €4,928,926, the value used to calculate the Loan to Value (LTV).
The project will be financed through a mortgage loan of €1,000,000 at a fixed rate with a 1st degree mortgage guarantee corresponding to PHASE II of the loan. The sum of PHASE I and PHASE II of the loan makes a total of €2,000,000 in total financing.
The exit of the investors from wecity is foreseen with the sale of one of the two homes that make up the developer’s project.
With a minimum investment of €500 and no investment limit, you can participate in this opportunity with excellent profitability and maximum guarantees.
Investment keys
- Purpose of the loan: To finance the completion of construction work on a luxury villa located in Lugar de Zimbreiros, Tábua, Ribeira Brava, Madeira Island, Portugal.
- Guarantee: 1st degree mortgage.
- Term: 15 months (+6 months possible extension).
- Interest rate: 12.50% per annum.
- Estimated total yield: 15.63%.
- Interest payment: at maturity.
- RICS valuation (current): €4,928,926 (current LTV: 40.57%).
- RICS valuation (HET): €6,305,000 (LTV HET: 31.72%).
- LTV First drawdown: 27.74%(first drawdown: €377,072.50).
- Contributions:
- Developer’s own funds: €709,000.
- Wecity loan PHASE II: €1,000,000.
- Minimum investment: €500.
- Maximum investment: No investment limits.
RICS Valuation
The current appraisal for mortgage guarantee purposes (Ministerial Order ECO 805/2003) amounts to €4,928,926, considering both guarantees. This represents a Loan to Value (LTV) over the current appraisal of 40.57%.
The valuation based on the assumption of a completed building amounts to €6,305,000. This represents a Loan to Value (LTV) over the HET valuation of 31.74%.
The Loan to Value (LTV) of the first disposition (€377,072.50) is 27.74%.
The independent appraiser in charge of identifying the value is TINSA, whose corporate name is PVW TINSA – Avaliações Imobiliárias, Lda. and which is registered with the CMVM as an approved appraisal company under number PAI/2003/0050.
The project
The project consists of financing the completion of the construction of a luxury villa located in Lugar de Zimbreiros, Tábua, Ribeira Brava, on the Portuguese island of Madeira.
Villa 3: financed by WECITY. 1st degree mortgage guarantee.
Villa 1: (completed)1st degree mortgage guarantee.
Location
Madeira Island is known as the “pearl of the Atlantic” for its subtropical climate, exotic flora and fauna and stunning mountain scenery. More than half of the island is home to a huge nature reserve, known as Laurissilva, classified as a UNESCO World Heritage Site in 1999. With an area of 741 km2, Madeira Island is an oasis in the Atlantic where forests, cities, beaches and mountains preserve a great natural and cultural wealth.
The island offers its visitors various activities, such as a visit to Cabo Girão, a famous viewpoint over the sea, a climb to Pico do Areeiro or a visit to the traditional triangular-shaped houses with blue and red details and thatched roofs in the area of Santana. For the more adventurous, the island also offers golf courses, jet skiing, windsurfing, scuba diving and surfing.
Since 2013, Madeira Island has been consecutively voted “World’s Best Island Destination” by the renowned World Travel Awards. This is one of the many distinctions that attest to the exceptional character of this archipelago, increasingly recognized as one of the most attractive tourist destinations worldwide.
The mortgage guarantee
The financing will be secured by a first mortgage on two of the three homes in the development; the first one already completed and valued at €2,850,000, and the second one, which is the one for which the financing is required, and which in its current state is valued at €1,063,000. In total €4,928,926, the value used to calculate the Loan to Value (LTV).
According to the appraisal report made by Tinsa, the current valuation amounts to €4,928,926, taking into account both guarantees. 1,000,000, which means a Loan to Value (LTV) on the current appraisal of 40.57% and a Loan to Value of the 1st drawdown of 40.57%.
The HET (Hypothetical finished building) valuation amounts to €6,305,000, which means a Loan to Value HET of 31.72%.
Collateral Agent
The constitution, preservation, management, administration and, if applicable, enforcement of the real estate mortgage rights on behalf of wecity investors shall be carried out by an entity external to wecity.
In this case, the appointed Collateral Agent will be the Report’s Collateral Agent.
Monitoring
The promoter must justify the use of the funds in each of the applications.
The use of the funds by the promoter will be monitored by a company external to wecity.
Compliance with Regulation (EU) 2020/1503 🇪🇺
Risk Warning
Investing in this crowdfunding project involves risks, including the risk of partial or total loss of the money invested. Your investment is not covered by deposit guarantee schemes established in accordance with Directive 2014/49/EU of the European Parliament and of the Council (). Your investment is not covered by investor compensation schemes established in accordance with Directive 97/9/EC of the European Parliament and of the Council (*). You may not receive any return on your investment. It is not a savings product and it is recommended that you do not invest more than 10% of your net assets in equity financing projects. You may not be able to dispose of the investment instruments at any time. Even if you are able to sell them, you may incur losses.
Pre-contractual cooling-off period for inexperienced investors
Inexperienced investors have a cooling-off period of four (4) days during which they may, at any time, revoke or withdraw, at any time, their investment offer or expression of interest in the equity financing offer without having to justify their decision and without incurring a penalty. The cooling-off period begins at the time the potential non-experienced investor makes an investment offer or expresses interest and expires after four calendar days from that date. To exercise their revocation rights, Investors may send an email to the following address: reclamaciones@wecity.com, filling in the “subject” field of such email as follows: “REVOCATION – Name of the Opportunity – Name and surname of the Investor”. In the event that you have made a monetary contribution linked to the financing offer, said amount will be returned as soon as possible to the wallet that, as an investor/user of the “WECITY” Platform, you have open with the “LEMONWAY” Payment Institution.
Credit risk
Credit risk is defined as the loss that may occur in the event of non-payment by the counterparty in a financial transaction. In this specific case, the risk that the Promoter does not pay the principal and/or interest on the Loan.
Sector risk Risks inherent to the specific sector.
Such risks may be caused, for example, by a change in macroeconomic circumstances, a reduction in demand in the sector in which the equity financing project operates and dependencies in other sectors. In any case the investor should be aware that adverse economic conditions or cyclical changes may lead to a weakening of the Promoter’s ability to meet its financial commitments in connection with the loan.
Risk of default
The risk that the project promoter may be subject to bankruptcy proceedings and other events affecting the project or the project promoter that result in the loss of the investment for the investors. Such risks may be caused by a variety of factors, including, without limitation: (serious) change in macroeconomic circumstances, mismanagement, lack of experience, fraud, financing not matching the corporate purpose, failure to launch the product or lack of liquidity. In the event of insolvency of the Promoter, the holders of the credits will be considered as credits with special privilege, as they are secured by a mortgage guarantee, in accordance with the cataloguing and order of priority of credits established by Royal Legislative Decree 1/2020, of May 5, which approves the revised text of the Insolvency Law (hereinafter, the “Insolvency Law”), except for those amounts that pursuant to Article 272 of the Insolvency Law must be classified either as ordinary credit or as subordinated credit, as appropriate.
Risk of lower or delayed yield
The risk that the return is lower than expected or that the project defaults on the payment of principal or interest.
Investment illiquidity risk
The risk that investors will not be able to sell their investment. There is no active trading market for the loan, so the investor may not be able to find a third party to whom to assign the loan.
Other risks
Risks that are, among others, beyond the control of the project developer, such as political or regulatory risks.
