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Calder Valley Community Land Trust

Fielden Acre Community Share Offer

£250 minimum

Risk factors

All investment and commercial activities carry risk, and investors should consider whether CVCLT shares are a suitable investment for them in light of their own personal circumstances.

You should remember that your investment is primarily for the purpose of supporting the society rather than making an investment return. As a Society, the maximum return offered to investors will always be limited.

This offer is not covered by the Financial Services Compensation Scheme.

General investment risks

It is important that you understand the following general points about holding community shares in CVCLT:

  • As a Registered Society under the Co-operatives and Community Benefit Societies Act 2014, CVCLT is registered with, but not authorised or regulated by, the Financial Conduct Authority. Any money you pay for shares is not safeguarded by any depositor protection or dispute resolution scheme. In particular, you have no right of complaint to the Financial Ombudsman Service, nor any access or entitlement to the Financial Services Compensation Scheme.
  • An investment in community shares is an at-risk investment in a trading business, not a loan or a deposit, and rates of return are not guaranteed. This investment should be considered as a medium to long term investment with a primarily social objective. Your shares may not be readily convertible to cash should you need to withdraw them.
  • As a member and shareholder of CVCLT you could, if the business is unable to meet its debts or other liabilities, lose some or all of your investment held in shares. However, your liability is limited to the amount that you have paid for your shares. Whilst it is the Society’s intention to pay interest on shares at the rate advertised in this offer, community shares do not enjoy any capital growth.

Risk management

CVCLT undertakes risk management through a detailed Risk Register which is overseen in detail by the Audit & Risk Committee. This is a requirement of the Regulator of Social Housing and a duty that the Audit & Risk Committee reports on annually to the Regulator.

Risk is managed through a series of ‘Risk Maps’. Each Task Group is required to draw up a Risk Map for the specific project or aspect of the organisation that the group leads on. Regularly (at least quarterly but were practical, every two months), Task Groups review and update the Risk Map.

Organisational level risks from these are fed into an Organisational Risk Map which in turn is reviewed and updated by the Audit & Risk Committee. Task Group and Organisational level risks are reviewed quarterly by the full Board of Trustees and recommendations made to the Audit & Risk Committee and to Task Groups.

The financial modelling associated with the planned developments also contain financial stress analysis, which test the risks CVCLT faces in bidding for and raising funds for developments, and in ensuring that the cash flow and subsequent income streams are robust.

Risk Register

Fielden Acre

The Fielden Acre project is managed through the wider Fielden Centre Task Group with specific risks identified in relation to the purchase of and future management of the properties.

Significant areas of risk have been mitigated – particularly repair costs and tree safety - through a recently commissioned buildings survey and tree safety survey both of which put in place the foundation for a regular process for the management of the repair of the buildings and site.

Areas of risk associated with the potential purchase of the residential properties by CVCLT include relationships with the managing association (Fielden Hall Association) and with the tenants. These relationships have been managed over the past few months through careful communication between CVCLT, the owners, FCA and the tenants. CVCLT has been able to assure tenants that they will have security should CVCLT proceed with the purchase.

The single biggest risk to the project at present is raising sufficient capital to purchase the properties. Of the three sources of capital finance, an interest only loan for up to £120,000 has been secured and a Booster Fund equity investment of £50,000 has been confirmed.

Homes England Grant

CVCLT is a Registered Provider of Social Housing and is entitled to apply for and receive grants from Homes England to develop affordable housing. CVCLT has been in close contact with Homes England over the past 5 years around this and previous development and have successfully raised Homes England capital grant in 2018/2019.

The level of grant applied for is within accepted levels of grant for housing purchase and developments by community-led housing organisations and the society is confident that, should Homes England still have funds available, the application will be successful at this level.

In the unlikely event that the society is unsuccessful in achieving this level of grant or no grant at all, the purchase is unlikely to go ahead and the society’s Receiving Agent, Ethex, will refund any investments made at no charge.

Community shares

The Community Shares funding is the least well known quantity at this stage. However, the society has been successful in raising funds very rapidly for the Walsden Project, in 2019. In 2018, the Trustees undertook a survey of known supporters and secured significant pledges of financial support for a large community shares fund on another project and has an identified core of supporters willing to invest in community shares at a range of levels. The project has had revenue support through the Booster Fund and secured £50,000 of equity match from the Fund which is very advantageous to securing a public offer.

Through its own reserves, a Booster Fund revenue grant and a REACH investment readiness grant, CVCLT has the funds available to launch and manage a share offer. The society also has an excess of loan agreed by CFfC which will provide a balancing fund should the optimum share target of £220,000 not be reached.

Future Loan Repayments

The Fielden Acre project is supported by the Community Foundation for Calderdale which has made an interest only loan available to the project at 2.5% interest. The capital is repayable after 5 years (2026). The society has the option to renegotiate the loan with CFfC prior to 2026 and extend the interest only period or repay the capital in full. The society’s contingency for this is to raise an additional £100,000 in community shares equity in 2025 to repay the loan.

Property Purchase

The risks associated with acquiring the properties are relatively low as once funds are secured, the process is a straightforward purchase and transfer of deeds. There are none of the risks associated with a new build project as with the Birks Court, Walsden project and the properties are already tenanted with tenants that have a good track record of looking after the properties and paying regular rent.

Unexpected Building Costs
The properties are Victorian, Grade II listed buildings. Over the past 20 years, the entire building has been fully renovated to a good standard including fitting of a new roof, refurbishment of heritage windows, drainage works, and fitting of modern heating, hot water and electrical systems. As part of the purchase, CVCLT is generating funds to undertake a range of repairs that a 2020 Building Survey has identified and has in place a 10-year Maintenance Plan which should ensure that a managed maintenance programme will prevent undue deterioration of the building and raise any repair issues before they become major repairs.

The society will fund general repairs and maintenance through annual repair costs covered by income and the reserves policy of the society provides sufficient cumulative reserves to cover longer-term building repairs on the basis of 15% of the value of the properties over the period of the plan. The society will also have recourse to heritage and other grant funds to support the longer term maintenance of the heritage elements of the building should they be required. As a last resort, CVCLT will raise additional funds for major building works through further community shares issues or through social investment funders. The buildings will be fully insured.

Risks to capital

Once capital funds are secured, the interest only loan from the Community Foundation for Calderdale is subject to a charge against the properties as security.

The Community Shares portfolio is subject to interest payments for investors only when the Trustees consider the society is in a position to make interest payments. This is a core part of the contract with community shares subscribers. There is a reasonably secure income stream from rents which more than covers the costs of running the properties and makes provision for interest on loans and share interest payments.

The withdrawal of a percentage of shares will be permissible in line with the share offer and at the discretion of the Trustees. This is estimated to be 5% of the value of shares in the society following an initial 3-year lock with replacement shares being sought through an Open Offer. This is an area of risk for the society and one that the Task Group will continue to work on in the period before any withdrawals are permissible to build up a core of supporters able and willing to support the project in the future.

The business plan will allow for a small mortgage to be taken on one of the properties should it be required to provide a fund to replace withdrawal of shares. However, the Trustees would prefer to replace share withdrawals by new shares investment.

The increase in membership (over the past 18 months and forecast through the share offer) will provide a platform for attracting additional community shares investment when it is required.

Applied for to date, of
£270,000 target
Please read the offer document and accompanying business plan in full before applying

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