Shojin Property Partners is an investment company that provides access to institutional-grade investment opportunities in the UK real estate sector for investors from across the globe.
In this video, Jatin Ondhia, CEO of Shojin Property Partners explains the benefits of investing in the Shojin Corporate Bonds.
He explains how the Shojin corporate bonds are structured, the risks involved in these bonds as well as how these bonds can be used to diversify your portfolio.
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An investment into a diversified income bond is a corporate bond, issued by Shojin Property Partners, the parent company. The funds from those bonds are used to invest into a number of different underlying projects that are issued by Shojin Property Partners.
A lot of investors would say to us that they weren't sure which project they wanted to invest in. And then they found that while they initially enjoyed the idea of picking individual projects, it started becoming too time-consuming. So they asked if they could just give us the money and we could just give them a fixed rate.
We invest those funds across a number of different projects and you get a fixed return. So the idea is that you can invest for a one year term or a two-year term or a three-year term, and Shojin Property Partners at the parent level guarantees you the fixed return, to be given back to you exactly at the specified time. Now what's great about that is you don't need to worry about which project the bonds are invested in, and you don't need to worry about the timelines of the funds coming back from those bonds, because it's Shojin's job to manage those cash flows. What Shojin gets is the benefit of borrowing from you and giving you a fixed rate of return, and then getting a higher return from the underlying projects. So it becomes a win-win.
As an investor, you get a fixed return for a fixed time period. As Shojin we get the benefit of generating a profit from that investment from the underlying projects. Now let's look at the risks. What can go wrong here? Now quite often people worry about the fact that the bond is unsecured, and it has to be unsecured because it's going in at the parent level. Now those funds are peppered into different projects, and they could even be moved from project to project. So at any given time you have no idea where those funds are. But for you, as long as you get paid back, it doesn't matter too much. So one of the biggest risks of putting your money into a single project is if something goes wrong in a single project, you could be exposed to a capital loss. But the way that we structure the diversified investment bonds is that it doesn't matter which project is paying back your investment. And if something happens to one project, the other ones still continue.
Shojin would then get the returns on the investments that we have in all the individual projects, but we also get our profit share on every single investment. So we ensure that we always have a good coverage of expected income versus the amount of money put in through the diversified investment bonds. The ultimate risk in all of this, a lot of people think it's something happening to the parent company of Shojin, Shojin Property Partners. In fact, that's not really the biggest risk. If anything happens to Shojin Property Partners, then your income, or the money coming back to you, can still come back to you from the underlying projects. As an FCA regulated company, we have a wind down plan in place, and if something happened to the top co of Shojin, because every single project is ring-fenced, they would still continue, go to completion and pay out the profits. So you would still get your money back.
The real risk in this though, is one of systemic failure. If one project goes down, it's not so bad, but if a lot of projects fail together, that's the biggest risk. But that implies a systemic failure in the market, and it doesn't matter what you invest in, in those circumstances you would probably end up losing money. It's very unlikely that would happen, and our projects are positioned and set up so that they're diversified in themselves at the different levels of risk, so you should be reasonably well protected. The other big risk is one of timing. If Shojin Property Partners doesn't have the money to pay you out on time, that could mean a delay to your investment payout. Now, generally speaking, Shogun would manage that, making sure that there's enough money coming back from underlying projects to make sure that we've got the money to pay back the investors.
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