Dear Client,
I’ve been in the CEO role here at Property Partner for 6 months now and want to start sharing my thoughts with you on a regular basis, and gathering your feedback.
The first few months
I joined Property Partner because I believe in the core proposition – at the click of a button you can leverage real property expertise, invest as much or as little as you like, diversify effortlessly across multiple high quality investments and then trade those investments 24/7. Investing in property has never been easier!
I was struck by the assets the company had built in just 4 years since launch. A client base of over 12,000 investors which grows daily, an institutional-grade property portfolio, and an industry-leading technology platform. In addition, we are the only UK property crowdfunding platform with a fully regulated market exchange where investors can trade their properties.
I’ve been incredibly impressed with the team here at Property Partner. Serious about generating value for investors, totally committed, innovative and passionate about delivering a revolutionary way for people to invest in property.
Responding to economic uncertainty
There’s no denying that there is a lot of uncertainty around the UK economy right now. This owes a lot to Brexit, and investors of all types, from businesses to individual savers, are less certain about making investment than they were a year ago. In property, government policy including stamp duty rises on second homes, tax on overseas investors and reduction in the tax shield of mortgage interest have put a damper on the market.
Despite these headwinds we’ve grown assets under management to £125m, maintained a total return rate of 7.3% and delivered dividends on new properties acquired averaging 5.5% in the last 12 months.
Watching the recent volatility in the stock market, I am reminded of the superb defensive qualities and long run performance of property investment. Indeed, the Office for Budget Responsibility has just increased its 5 year forecast of house price growth. They are now forecasting total house price increases of 16.8% from 2019 to 2023, an average of 3.4% per year, compared to only 2.8% a year over a five year period in their March forecasts. Allied to this, the Chancellor has confirmed in yesterday’s budget that he will extend support for housebuilders and prolong the help-to-buy scheme for a further 2 years until 2023.
Property has long been a frustrating asset class to deal with, hard to access, nearly impossible to diversify, and slow to liquidate – these are the problems we’ve set out to solve. But fundamentally the UK is still short of housing, students need to be accommodated and companies need premises to trade from: in short the long term investment performance of UK property still looks attractive.
Our analysis shows that across the whole country there is still strong price growth available for carefully selected properties, with some areas showing very good growth. You can read more about this in a blog from our Head of Research here.
My belief is that current levels of uncertainty will reduce in the coming months as Brexit is resolved, and we will see funds currently being held in cash deployed more actively. We see this as an opportunity to drive hard bargains as sellers become more realistic in a harder trading environment. Our recent experience on re-negotiating the price of Terence House is a case in point.
We believe there are great buying opportunities available in today’s market.
Our strategy evolves
Before I arrived, the team had already started to diversify from residential property to different asset classes – for example student accommodation. In June this year, we asked our clients about attitude to risk and found that you have a broad range of appetites for different risk-return characteristics. We have continued to branch out beyond the residential market in search of strong return opportunities, so as well as different styles of residential property, we have launched opportunities in commercial property and property development debt. Rob Weaver, Director of Property talks more about these asset classes here.
Our strategy is to broaden the range of opportunities we offer to our investors, so you can select investments to suit your needs.
We are now working with some carefully selected partners to bring exciting investment opportunities to the platform, all thoroughly vetted and reviewed by our in house property team, and approved by our Investment Committee. Through working with these partners, we believe we can offer wider choice and be an attractive platform for more investors to access property conveniently and profitably. And of course using the Property Partner fractional ownership model, investment amounts can be tailored to individual appetite.
Many investors are seeking high yield opportunities and that’s one reason why we are also bringing property-backed lending opportunities to our marketplace. Our first loan deal, yielding 10% per annum, was to support a scheme of 106 flats in Basildon, and we have some more exciting deals in the pipeline.
Every month we add to our portfolio of properties under management and see more trading on our secondary market. Since launching our secondary market, we’ve seen over £25m of capital returned to investors. This compares to £75m of investor equity raised, showing that fully one third of investors’ funds have traded on the secondary market. We’re demonstrating how property can actually be a liquid investment. As we continue to scale our platform, we’ll bring even more efficiency, and more liquidity.
Our vision is to be the leading platform where investors not only find great property investment opportunities sourced by experts, but can achieve diversification and liquidity at the same time.
We’ve expanded our services
Whilst many of you are highly experienced property experts who like to review each deal, we also need to offer services to investors who simply don’t have the time or expertise to assess each individual opportunity.
That is why we have launched Investment Plans, giving clients the ability to instantly create a fully diversified portfolio which is tailored to their growth/income appetite. We also created the option to reinvest dividends on a property-by-property basis, helping clients realise the powerful benefits of compounding returns. Over 1,000 investors have since taken up this option.
We’ve concluded a fund raising from shareholders
I’m really happy to report that we continue to enjoy fantastic shareholder support. We have recently completed the final tranche of our 2018 fundraising activity that has seen £7m of shareholder capital injected into Property Partner during the last 12 months. Our shareholders include leading venture capital firms Octopus Ventures, Index Ventures, Dawn Capital and Seedcamp. We are well capitalised for continued growth.
Looking forward
Our focus is to bring a wider range of compelling, well researched investment opportunities to our marketplace. Only by providing you with a diverse range of excellent investment opportunities will we continue to set ourselves apart from competitors, continue to scale our business and achieve our ambition of making property investing as easy as trading stocks and bonds.
As always, I welcome feedback from all our investors. Your feedback helps determine the investment opportunities we bring to the platform. Please feel free to email me at ceo@propertypartner.co with any thoughts and I’ll endeavour to respond to all messages.
Kind regards
Marshall King, CEO
Important notice: Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Forecasts are not a reliable indicator of future performance. Gross rent, dividends and capital growth may be lower than estimated. 5 yearly exit protection or exit on platform subject to price & demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Before investing please read Key Risks.
Financial promotion by London House Exchange Limited (8820870); authorised and regulated by the Financial Conduct Authority (No. 613499).
1. Since the launch of the platform in January 2015, properties have, after fees and corporate taxation, delivered an estimated total return of 7.3% p.a. up to 30 September 2018 ; including 4.0% net rental income (dividends) and 3.2% capital value growth. These returns are calculated six monthly and (i) with reference to the average dividend yields and price movements of properties with at least 3 months trading history on the Resale Market, (ii) spreading over 5 years any purchase discount to the RICS valuation, (iii) amortising property acquisition costs over 10 years, (iv) assuming the property remains tenanted, (v) assuming that investments are held for the long term, to the extent that the annualised impact of the Property Partner initial transaction fee becomes immaterial, and (vi) weighting each property’s performance according to their initial funding value. Past performance is not a reliable indicator of future performance.