Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 minutes to learn more.
Risk information

Risk summary for investments in speculative illiquid securities which are arranged by a firm by way of an online platform.

 

Estimated reading time: 2 min

 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be very complex and high risk.

 

What are the key risks?

 

  1. You could lose all the money you invest
    • By investing into a real estate project through Shojin you will be investing in a Bond instrument issued by Special Purpose Vehicles (SPV’s) which provide a funding facility for the purpose of real estate development. If the project fails, Investors can lose some or all of the money they invested.
    • Advertised rates of return aren’t guaranteed. This is not a savings account. If the project doesn’t pay the SPV back as agreed, you could earn less money than expected or nothing at all. A higher advertised rate of return means a higher project risk with an increased probability of losing your money.
    • Due Diligence and project oversight is carried out by the platform on each Shojin project that you are investing into to assess how well they are expected to perform. However, you should always also do your own research before investing.
    • These investments are sometimes held in an Innovative Finance ISA (IFISA). While any potential gains from your investment will be tax free, you can still lose all your money. An IFISA does not reduce the risk of the investment or protect you from losses.

  2. You are unlikely to be protected if something goes wrong
    • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.

  3. You are unlikely to get your money back quickly
    • This type of property investment could face delays that can delay payments. These investments could also fail altogether and be unable to repay investors their money.
    • You have the opportunity to sell your investment early through the secondary market but there is no guarantee you will be able to find someone willing to buy.

  4. This is a complex investment
    • This investment has a complex structure to ensure the interest of investors is protected. Investments are made into each designated project SPV and are ringfenced from other project SPV's to ensure full transparency of each investment made.
    • You may wish to get financial advice to understand how the structure works before deciding to invest.

  5. Don’t put all your eggs in one basket

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

For further information about minibonds, visit the FCA’s website here.

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Our company
Shojin is an FCA-regulated fractional investing platform enabling global investors to build their wealth from UK-based real estate investment opportunities.
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Invest - Products - Mezzanine

Fund up to 90% of project costs.

Top up funding that allows you to minimise your contribution, enhancing your return on capital whilst maintaining full control.

What is a Mezzanine loan?

Shortfall funding.

Mezzanine loans are used in conjunction with senior debt to reduce the equity requirement for developments and strategic acquisitions.


This type of lending relies on Loan to Gross Development Value (“LTGDV”) and Loan to Cost (“LTC”) caps, and generally attracts a higher, fixed interest rate than bridge or senior development finance.

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How does a Mezzanine loan work?

Subordinated debt.

Mezzanine loans reduce the overall equity requirement by topping up the capital stack and adding an additional layer of debt below senior debt. This type of finance allows you to retain the control of the SPV and benefit from any upside.

 

They are subordinated in priority and rights to the senior lender and require a second legal charge. We structure our mezzanine loans so that they are either fully drawn on day one or periodically drawn over the lifecycle of the investment.

 

Being second in line within the capital stack, they are paid off after senior debt but before borrower equity and profit.

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Apply for funding
Our team of experts will review your proposal and present it to our credit committee. If it meets our funding criteria, we will submit an indicative offer letter. Upon acceptance and payment of the commitment fee, we will undertake due diligence, instruct a valuer and project monitoring surveyor as well as engage with solicitors.
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Draw down
Upon receipt of all the required reports and completing all internal checks, legal documents will be signed and funds released within 5 business days.
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Repayment
Once the scheme concludes, the loan will be repaid through an agreed exit strategy which can include unit sales or refinancing.

FAQs

If you would like to find out more about our flexible funding solutions, please get in touch with a member of the team. 

Contact us
What is the minimum/maximum ticket size? caret-down-light
We provide between £1,500,000 - £6,000,000 per transaction.
What are your mezzanine product parameters? caret-down-light
We fund up the lower of 90% LTC or 75% LTGDV, including interest roll up.
Do you take any security? caret-down-light
As standard, we require a second legal charge, debenture over the borrowing entity and personal guarantee. We will take additional security on a case by case basis and would prefer to mitigate risk as opposed to maximise returns.
What type of opportunities do you fund? caret-down-light
Although we specialise in development finance, we fund an array of opportunities, including acquisition, refurbishment, ground up development, income stabilisation and releasing equity from an existing asset/portfolio. We mainly fund residential-led use classes that are located in major towns and cities across the UK.
What are your typical terms? caret-down-light
Our typical terms last between 6 - 24 months.

Go further with Shojin

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More opportunity
No management fees. Smaller sums to take part. Lowered barriers for access.
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Shared risk
Shojin puts own funds into projects. We share in the risk and rewards together
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Knowledge
We use our thorough due diligence and expertise to ensure the best outcome – and you’re not left out the loop.
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Wealth
You get paid out before we do. You’re more likely to gain higher returns than traditional, inflexible investing routes.