thumbnail of Pax Apartments

Pax Apartments

Interest rate 13.0% a year
Term 3 years
Total Invested £3.1m
1707  investors
Maturity date 30 Jun 2022
thumbnail of Pax Apartments

What does the company do?

Pax Apartments is a project company setup by Octevo Housing Solutions Limited (“Octevo”) to finance and build social housing.

Octevo, 100% shareholder of Pax Apartments, was set up in 2016 to identify and develop affordable housing using a business model designed to address the core procurement and funding barriers faced by a number of registered social landlords and some local authorities. Rather than requiring them to take on and fund the predevelopment, planning and construction risks and costs, Octevo would take on these costs and build and own the properties in return for a long term lease that should secure long term rental revenues for Octevo. This model is designed to allow private funding to increase the amount of small-scale, quality affordable housing for long-term social use.

Octevo’s objective is to build quality affordable homes that its registered social landlord or local authority partners will lease on a long term basis. In the case of this development, the leases are packaged up with one registered social landlord and will be effective for 50 years. A registered social landlord must abide by the UK’s regulation of social housing, which includes a cap on the amount of rent it can charge for affordable housing. Once the properties are built, the registered social landlord pays a single monthly rental amount in respect of all the homes and will manage the sourcing of, and ongoing relationship with, tenants (usually individuals and families on local authority waiting lists). It will be responsible for the ongoing maintenance of the homes as well as the collection of rent.

Why did the company raise money?

Pax Apartments raised funding to refurbish and fit out a building with 33 apartments. The property, for which Pax Apartments is the leaseholder, is in the Ropewalks area, within the Riverside ward of Liverpool, just south of the city centre. The original building, formerly warehousing and latterly offices, has been totally stripped back to its original structure and refurbished using quality materials and fittings. The layout provides spacious communal areas and good levels of natural light for all the apartments. The properties have been extensively refurbished in a contemporary style with quality fitted kitchens and bathrooms throughout and will be let fully furnished. The building will make 33 homes available for affordable and supported living. The owner of the freehold property and building is Hope Street Properties Limited to which Pax Apartments pays ongoing rent.

How does the company expect to repay the investment?

Octevo’s original model to repay investors was to look to sell the long-term rental income from the properties developed by Pax Apartments (either on its own, or packaged with the rental income from other properties being developed) to a large investor, such as a pension fund. In exchange for an upfront lump sum, the ‘new’ investor receives the rights to the rental income after costs for the remainder of the life of the lease. This upfront sum would be used to repay investors.

How is the company making an impact?

The UK has a shortage of suitable housing and in particular, a shortage of affordable housing available to people on social housing waiting lists. Octevo’s business model is designed to remove the barriers that are constraining registered social landlords and local authorities from delivering the number of new homes needed, and rapidly scale the the access to affordable, and high quality, homes.

Investment status

This investment was originally expected to be repaid on 30 June 2021. However, due to delays in completing the property portfolio, principally due to the knock on impacts of Covid and associated lockdowns, the company was unable to make the repayment and interest payment due on the original maturity date.

With the agreement of investors, the investment was first extended until 31 December 2021 (with the interest rate rising to 10%) and then further extend to 30 June 2022 (with the interest rate rising to 13%) to give the company more time. The original directors of Pax Apartments were unable to deliver their plan within the extended period and Octevo Housing Solutions is now in administration.

The new directors of Pax Apartments are exploring the option of selling the long-term rental income from the Pax Apartments properties alongside other properties developed by Octevo. Please see the Updates section for the latest news on the directors' efforts to return money to investors.

The building situated in the Ropewalks area of Liverpool
The building situated in the Ropewalks area of Liverpool

Key terms

Issuer Pax Apartments
Return 13.0% a year
Term period 3 years
Start date 11 June 2019
Maturity date 30 June 2022
Capital repayment Lump sum on maturity
Amount raised £3,100,000.00
Return structure

Interest is paid every 6 months with the capital repaid as a lump sum on the maturity date.

Secured or unsecured Secured It is important to understand that security does not guarantee repayment of your investment or returns.
Security package

This investment has first ranking security over all of the assets of Pax Apartments under a package of security documents including:

  • a security agreement (including fixed charges and a floating charge) over all of the assets of Pax Apartments
  • a share charge over the shares of Pax Apartments
  • a security assignment of contractual rights granted by Octevo over certain documents.

As Pax Apartments does not own the building itself, the security does not include the building nor the freehold of the land.

Early repayment options

The company can choose to repay the investment at any point from and including 30 June 2020, subject to paying an early redemption fee equal to half of the interest that would have been due between the early repayment date and the original maturity date, 31 December 2020.

See the Debenture Deed for details of all circumstances in which the option for early repayment may be exercised.

Documents

Debenture Deed
Download PDF The debenture deed sets out the legal agreement and terms for this investment.

Payment schedule

This table gives a breakdown of what is due to be paid back on this investment, based on an example investment of £1,000.

Payment schedule table
Payment date Capital repayment Interest Total
31 December 2019 £0.00 £39.12 £39.12
30 June 2020 £0.00 £34.90 £34.90
31 December 2020 £0.00 £35.28 £35.28
30 June 2022 £1,000.00 £156.93 £1,156.93
Total £1,000.00 £266.23 £1,266.23

Updates

These updates tell the story of the investment over its life and include information reported to investors by the company or council behind the investment. The updates are provided for informational purposes only and do not constitute an inducement or invitation to invest. Information provided at the time of publishing may no longer be accurate.

Please read the full update here

Please read the full update here

The new directors of Merseyside Assured Homes have made available a recording of the webinar held on Wednesday (31 May 2023) for those who were not able to attend on the day.

The directors introduced themselves to investors and provided more detail on their backgrounds and motivations for taking on the role, as well as talking through the current status of the Merseyside Assured Homes properties and their proposal.

You can view the recording here (the passcode to view the webinar if needed is: 7&BBA8zR).

Please read the full update here

Please read the full update here

Dear investors,

We apologise that you haven't heard anything from us for a while and nothing since our shareholder Octevo Housing Solutions (Octevo) went into administration. With the company’s previous director Robert Macmaster also declared bankrupt and as the principal individual behind Octevo, it has been taking time to understand the full picture. Jeremy Friedlander, the remaining director, has not been active day to day in the business.

The company has now appointed Rod Black as a director to assist Jeremy given the amount of work that is required across Octevo's subsidiary companies to return capital to investors (he has also joined the board of our sister companies Merseyside Assured Homes and Liverpool Community Homes) after a review of the potential conflicts given his other roles at Propifi Capital and Kentish Homes.

We had hoped to give you a much fuller update before year end including an update on our plan to make an initial repayment to you which has been delayed. However the administration of Octevo has created added complexities for the group and with only a drip feed of information we are concerned about making statements that subsequently prove to be inaccurate or incomplete. However, we want to assure you that there is significant work going on in the background and that the company is working hard to progress the process of arranging the new loan into the company to allow the initial partial repayment to you. The administrator of Octevo is also continuing to work to keep ownership of Octevo's London development in the group to cover any potential remaining liability, if any, to you after the refinancing plan has completed.

We will be in touch in the new year once we are in a position to give an accurate update to you on when we expect to return money back to investors.

Best regards,

Jeremy Friedlander and Rod Black

Directors of Pax Apartments Plc

Please read the full update here

Pax Apartments continues to progress the legal steps to complete the loan funding which will allow it to make the initial repayment to investors. The loan funding is coming from a specialist property funder with a small team so the process has taken longer than hoped with some team members away in August, however progress is being made and Pax Apartments does not expect it to be too much longer. As soon as a completion date is known this will be communicated to investors which will give more clarity on when investors can expect to receive the initial repayment.

Thank you to all those who have voted on the proposal from Pax Apartments.

As a reminder, the repayment proposal will mean your investment will be repaid in two stages. The company will borrow money against the properties to allow it to make an initial payment to you with the outstanding amount due for repayment by 30 June 2023. The proposal can be found here.

In order for the proposal to be agreed, investors holding 75% of the Debentures had to vote in favour of a Special Resolution — this threshold has been met and the repayment proposal has therefore been accepted.

In favour Against
% of debenture holding 78.7% 2.5%
Investors 1,166 45

What happens next?

Pax Apartments will now accept the initial loan it has been offered and as part of this process the security structure will be amended so that the new lender is first ranking and Debenture holders will hold second ranking security. This initial loan will allow Pax Apartments to make an initial repayment to you of approximately 63% of the amount owed to you.

Pax Apartments is in the final stages of completing the legal documentation and receiving the funds. It is expecting to receive any day now a transaction completion date from the lawyers and on which day it will be able to make the initial payment to investors. This date, which is expected to be around mid-August, will be communicated to you as soon as it is known.

Pax Apartments will then work with Kentish Homes and the council to re-home the current tenants in alternative accommodation. Once this process is complete, the company will perform the required minor refit of the homes before letting out the homes to private tenants. The company hopes to complete this process within 6-9 months and will then look to borrow the larger amount to allow the company to repay the outstanding amount to you.

Pax Apartments has asked investors to vote on a proposal that would see your investment repaid in two stages. If the proposal is agreed, the company would borrow money against the properties to allow it to make an initial payment (equivalent to approximately 63% of the amount owed to you) shortly after the proposal is accepted.

The unpaid amount would remain outstanding with a final repayment date of 30 June 2023 (an additional 12 months). The company expects to borrow an additional amount against the properties, after a change of use, to repay you in full. You would receive an additional amount of interest for the extended period based on how much the company can borrow.

The terms of the investment can only be changed with the approval of investors by voting on a special resolution. In order for the proposal to be accepted, investors holding at least 75% of the debentures must vote in favour.

What do you need to do?

  1. Read the proposal from the company which sets out more details about the plan to repay you and why the company needs to change the property use to do so.
  2. Read the Special Resolution which is the legal document that you are voting on.
  3. Place your vote on the Special Resolution. Please place your vote by 5pm, 22 July 2022.

Please read the full update here

Please read the full update here

Thank you to all those who voted on the proposal from Pax Apartments - voting has now closed.

As a reminder, the proposal was to extend the maturity date by a further 6 months to 30 June 2021, and increase the interest rate from 10% p.a. to 13% p.a. for the period between 1 January and 30 June 2022. The proposal can be found here.

In order for the proposal to be agreed, investors holding 75% of the Debentures had to vote in favour of a Special Resolution. This threshold has been met and the proposal has therefore been accepted. In total 1,299 investors holding 81.7% of the Debentures have voted in favour of the Special Resolution, with 18 investors holding 0.9% of the Debentures voting against.

With the proposal accepted, the investment has been extended and the schedule of interest payments has been updated in your Abundance account. Pax Apartments will continue to provide investors with updates on the progress towards raising the funding required to repay investors.

Please read the full update here

Pax Apartments has asked investors to vote on a proposal to extend the investment. Therefore trading of this investment has been suspended.

Please read the full update here

Pax Apartments opened for investment today.

Thank you to all those who voted on the proposal from Pax Apartments - voting has now closed.

As a reminder, the proposal was to extend the maturity date to 31 December 2021, and increase the interest rate from 7% p.a. to 10% p.a. for the period between 1 July and 31 December 2021. The company has the option to repay you at any point within this extended period. The proposal can be found here.

In order for the proposal to be agreed, investors holding 75% of the Debentures had to vote in favour of a Special Resolution. This threshold has been met and the proposal has therefore been accepted. In total 1,389 investors holding 85.5% of the Debentures have voted in favour of the Special Resolution, with 8 investors holding 0.2% of the Debentures voting against.

With the proposal accepted, the investment has been extended and the schedule of interest payments has been updated in your Abundance account. You will be able to list the investment for sale on the marketplace again shortly once the legal process has been completed.

Pax Apartments will continue to provide investors with updates on the progress towards raising the funding required to repay investors.

Please read the full update here

Please read the full update here

Please read the full update here

An investment return from Pax Apartments was paid today.

Please read the full update here

The final refurbishments which the Debentures have paid for were completed, but delays due to lock down measures requiring the local authority to cancel all pre-scheduled viewings, meant that tenants were not able to move in by March 2020 when Covid-19 constraints took effect.

We now have tenants moving into Pax Apartments on Seel Street and interest from potential residents is gathering at a steady pace. We have needed to adjust our strategy as Liverpool City Council are still not conducting interviews on a one to one basis and further they do not have access to reference prospective tenants. We fully anticipate that all 33 apartments will be occupied this forthcoming July.

Since the lockdown started we have had to put a halt to works on our construction sites. Currently construction is still frozen due to unavailability of material supplies and workers are understandably unwilling to risk social contact until the scale of the virus spreading is reduced. Our contractors are drawing up plans for a reduced and staggered return on some trades as long as social distancing and protective measures are put in place. How quickly we can restart is unclear as we await details of how the lockdown restrictions will be lifted.

The contractor is looking at a possible skeleton staffing for a return a week today to start on at least one site where safe distancing can be achieved without compromising their workers safety. They are consulting with their Health & Safety executive on all the protective measures to ensure that all guidelines are followed.

Prior to the official lockdown we had 27 tenants identified for interview to live in our finished homes, sadly we only managed to see 4 of them before lockdown. There are a number of prospective tenants wishing to put down rent deposits but, until lockdown is relaxed, interviewing cannot be conducted safely. We still anticipate strong demand for our homes, so once conditions allow interviews will be resumed.

This sums up the current situation for Octevo and its projects, and updates on any further developments will be provided accordingly.

To date (25th March) we have been able to continue to work on the various sites we are developing but are now seeing things grind to a halt and so are expecting some delays. At this point it is not possible to draw any conclusions, but we hope the delays will be only a matter of weeks.

On our construction sites, contractor availability has been decreasing due to illnesses, travel restrictions, availability of equipment and supplies and for health & safety reasons. Builders merchant’s and plant hire companies are closing which will have knock on effects on the wider construction industry. We are able to continue work on a few minor and essential jobs but will have to delay most of the work.

For properties that are finished, we are having to stop doing viewings because potential tenants are no longer attending scheduled ones and the Councils are suspending new viewings for the time being.

These are unprecedented and uncertain times but beyond the COVID-19 crisis the continued and growing need for social and affordable housing remains – so we will continue to do our best to help meet that demand. We will continue to follow government guidance and strive to get back on track where it’s safe to do so and keep you updated of any material developments.

Please read the full update here

An investment return from Pax Apartments was paid today.

This investment closed today.

Pax Apartments has taken up the option to extend the offer close date by two months. The close date for this investment will now be 30 September 2019, unless the full amount is raised before then. The extension of the close date does not affect the terms of the investment.

Pax Apartments opened for investment today.