As the UK emerges from lockdown and the property industry gets back on its feet, early market data is looking positive. According to Rightmove, enquiries to agents in England were up 32% on average last month. Similarly, there are positive signs from our lending partners that normal business is beginning to resume as they have started to receive redemption funds as properties are sold and refinances take place.
Our investment team is continuing to work with our lending partners to safeguard investor capital, as well as repay capital and interest where possible to investors whose ISAs and Bonds have matured. However, whilst these signs are encouraging, we are continuing to experience delays in repayments to ISA and Bond investors due to the impact of the Government measures which halted the property finance industry in March and April.
1. We remain confident that your capital will be repaid in full
Despite the economic impacts of Coronavirus, we are confident in the strength of our property loan book and the quality of property assets that it is secured upon. Our portfolio has an average loan to value (LTV) of 59%. This means that the value of the properties within the portfolio would have to fall by over 30% on average in order for investor capital to be impacted. We therefore still expect the full repayment of all investor capital.
2. Investment repayment dates have been extended with full paybacks expected in the early autumn
Investors can expect only to receive a partial repayment on the maturity of their investment Bond or ISA (equivalent to the amount of their investment that is currently being held in cash). Any remaining capital and interest could take until early autumn 2020 to be paid back. To view the amount of cash you are likely to be paid back on maturity, download the Allocations Report in the Documents section of your Investments.
3. There is a risk that returns may be lower than expected
Given the Coronavirus delays and impact on the property market, we want to remind you that interest, like capital, is not guaranteed. In the event that there is a reduction in property values and this reduction results in our loans not being repaid at their original values, it is likely that the return on your investment will be lower than initially forecast.
4. Subordination risk remains a factor
We also want to remind you that your money is invested alongside other institutions, such as banks, to fund property loans. This is an important point because it’s these institutions that occupy a senior position in each loan and as a result they have more control than Propio investors and are paid back first.
Our lending partners have now started to receive redemption funds as properties start to be sold and refinances take place. However, they have confirmed that further redemptions need to occur before the senior lenders will release funds enabling Propio investors to be paid back.
How do I find out more?
If you’d like to understand more about the underlying loans you are exposed to, just login to your account, go to your Investments and download the Allocations Report in the Documents section. We’ve also upgraded this report to include a ‘status’ for each loan so you can find out more about each of the property projects that your money is financing.
If you have any further questions, please check out our FAQs or contact us at firstname.lastname@example.org.
The Propio Team