CITM3094 - Investment by CDFI: Examples of property-related investment

There are restrictions on the amount of investment that an accredited Community Development Finance Institution (CDFI) can make in enterprises that acquire, construct, develop or hold interests in property:

  • investment of money raised under the CITR scheme in residential property is prohibited outright (see CITM3090), and
  • the extent to which investment in non-residential property is regarded as a ‘relevant investment’ is limited (see CITM3092).

The following examples of property-related investments by CDFIs illustrate how various investments would be categorised for CITR purposes.

Example of Investment by CDFI

Category
Acquisition of new base of operations: Riding Centre for the Disabled

Loan to a non profit-distributing enterprise that provides equestrian opportunities for disabled children and adults.

Money used to acquire existing stables and paddocks as a base for operations.

Small amount of income received from local school for occasional use of horses & equipment by (able-bodied) pupils



Not caught by Schedule 1(8) nor be regarded as funding ‘property development’ for the purposes of Annex D.


The main activity of the enterprise is the provision of equestrian activities to disabled persons. Incidental income from local school does not detract from that main purpose.
Construction of new base of operations: Pre-school group

Loan to non profit-distributing pre-school group previously operating from village hall.

Money used to lease land from primary school and erect new purpose-built facility.

Sporadic and minor income from renting out building at weekends as a venue for children’s parties


Not caught by Schedule 1(8) nor be regarded as funding ‘property development’ for the purposes of Annex D.

The main activity of the enterprise is the pre-school education. Incidental rental income does not detract from that main purpose
Acquistion & refurbishment of base of operations: Car Wash & Valet Service

Loan to inner-city partnership running car wash and valet service.

Money used to lease and refurbish previously derelict workshop.



Not caught by Schedule 1(8) nor be regarded as funding ‘property development’ for the purposes of Annex D.

The main activity of the enterprise is that of car wash and valet service.
Acquisition & refurbishment of base of operations: Managed workspace

Loan to non profit-distributing Training and Employment Centre providing ‘incubator’ units to new micro and small businesses.

Money used to acquire and refurbish property that is then sub-let to new enterprises from whom rental income is received.



Loan would fall within Case 1 of Schedule 1(8) SI2003/96.

The main activity of the borrowing enterprise is to hold property which it sub-lets in return for rental income.


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