High quality disclosure of information is the lifeblood of marketplaces. On our Resale Market, our clients require current information to understand risks and opportunities, and to make sound investment decisions.
This quarter, we are again enhancing the extent of information disclosed, releasing a substantial suite of announcements relating to our properties, which you can find links to in this blog.
To allow for the orderly announcement and review of information that is price sensitive, every quarter we pause trading on our Resale Market for three working days.
Today, the Resale Market closed at 11am and will re-open for trading at 11am Thursday 10 October.
Property portfolio has decreased in value by 0.05%
Independent surveyors revalue all properties in our Residential portfolio every 6 months, and our Student Accommodation portfolio every 12 months. Both portfolios have been revalued at 30 September 2019 and the overall result is a decrease in value of 0.05%. Within this, the Residential portfolio increased by 0.1% and the Student Accommodation portfolio decreased by 0.6%.
These averages and their impact on performance are explained by understanding the break-down between (i) capital gain and dividend, (ii) residential property and student accommodation, (iii) London vs the rest of the UK and (iv) the impact of individual properties. Read more here.
5th anniversaries of early properties commence in December 2019
Our first property will have its 5th anniversary on 15 December 2019, followed by more than 30 properties through the course of 2020. This is a significant milestone for Property Partner and a process that we are eager to get underway.
Many of these properties are trading on the Resale Market at significant discounts to independent valuation. For example, there are 10 properties with an average of 8 months to their 5th anniversary, trading at a discount of over 16%.
To ensure that investors are giving explicit consideration to upcoming 5-year anniversaries, we display this information prominently on the Resale Market.
The 5-year exit mechanic gives all shareholders the opportunity to exit at a fair market value. It relies on the direct engagement of investors in each property and the process is an important one for all investors to understand. Read more here.
Golden Hill Fort increases in value, following the sale of a unit
In September, we offered shareholders in Golden Hill Fort the opportunity to sell one of the 14 units. The sale represented a 95% net capital gain on equity relating to the unit sold. Across the whole of the Golden Hill Fort investment, the value of investors’ equity increased by 6% (before the 30 September 2019 revaluation) and the amount paid out in dividends will increase by 12%.
There was overwhelming shareholder support for the sale: 99.9% voted in favour of a sale; shareholder participation was 79.4% of shares held. The sale of that unit has now completed and the independent surveyor has uplifted the valuation of the remaining units in Golden Hill Fort by 19%. Read more here.
Resale Market trading has had a challenging quarter
Since we announced changes to our fee structure on 15 July 2019, the average trading price of investments on the Resale Market is 9.1% lower.
As a result, there are attractive opportunities available on the marketplace. For example, the 10 highest yielding properties can be acquired with an average dividend yield of over 6%; approximately 15 properties can be acquired at a discount of greater than 20% to the latest independent surveyor’s valuation.
Our Investment Plans offer the ability to invest in the most attractive Income, Growth or Balanced portfolios available, according to investors’ strategies. Read more here.
Development loan investment surpasses £5.5m
We have continued to source carefully selected mezzanine debt opportunities in partnership with Proseed Capital. We completed 6 new loans last quarter with total lending now exceeding £5.5m.
Since offering the ability to invest through an Innovative Finance ISA, approximately 40% of development loan investment has been from clients’ ISA accounts.
The portfolio of loans is maturing and in September, we saw the successful early repayment of our first development loan (Regent House, Basildon), 3 months ahead of schedule. Each quarter, we provide updates on the progress of outstanding loans, which are available within each loan’s investment page. Read more here.
Dividend reviews have resulted in adjustments for 16 properties
We constantly review the rental performance and financial position of all investments, and every quarter we adjust dividend payouts where necessary. This quarter, we have increased dividend payouts for 6 properties and decreased payouts for 10 properties. Read more here.
Fire safety updates
Two of our properties, Premier House, Edgware and Picture Works, Nottingham, continue to work through fire safety issues relating to their cladding. Read more here.
As always, we welcome feedback from our clients and look forward to discussing these announcements with as many of you as possible.
Warren Bath
CEO