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Propio Coronavirus Update: May 2020

This update explains how the Government’s plan to end lockdown will impact the UK property finance market and, as a result, live Propio investments.

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propio

May 13th, 2020

Dear Investor,

On 10th May the Government released their plan to bring the UK out of lockdown. Among a number of measures, it set out that the UK construction industry should recommence from 13th May and that, in general, work for many other industries should also restart, even for people who cannot work from home. This is positive news for the UK economy and the property finance and development industries in particular. It means that on-site property valuations can now occur, construction workers can return to development sites that have been on hold, and people can finally buy and sell homes.

How does this affect my Propio investment(s)

These measures are an important step forward for Propio and the property loans that your money is invested in. It means that the projects your capital is funding can recommence, value can be built and exits on individual loans – via sale or refinance – can occur.

Despite these recent positive changes, there has been little overall change since April with regards to the status of Propio investments and, as a result, we want you to be aware of the following:

1. We remain confident that your capital will be repaid in full

Despite 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. It is likely that the end date of your investments will now be extended and that you will be paid back capital and interest as it becomes available

Due to the impact of the crisis on the property finance industry, at present we cannot accurately predict when your investment will repay in full as that depends on the resumption of the normal operation of the UK property and lending markets.

As a result, you can expect to receive a partial repayment on the maturity of your investment Bond or ISA (equivalent to the amount of their investment that is currently being held in cash) and that any remaining capital and interest could take further time 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.

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 info@propio.com.

Best wishes,

The Propio Team

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propio

May 13th, 2020

You could lose all of your money invested in this product. This is a high-risk investment and is much riskier than a savings account. ISA eligibility does not guarantee returns or protect you from losses.

You could lose all of your money invested in this product. This is a high-risk investment and is much riskier than a savings account. ISA eligibility does not guarantee returns or protect you from losses.

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