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Post by British Pearl on Apr 14, 2020 12:22:00 GMT
Dear forum members
As an investment manager it is our responsibility to manage the investments (property portfolio. In the ideal case we exit investments when we are able to lock in profits for our customers and unfortunately in other cases, we will need to exit investments where there may be a loss. When we are evaluating investments, we consider the cashflows they generate (rental income) and their capital value (sales value). The lockdown implemented as a result of Coronavirus is having a devasting impact on global economies, in the UK rising unemployment and a complete ban on evictions and additional protections for renters has increased the risk to rental income receipts and capital values, uncertainty over Brexit also poses a significant risk to income and capital values. We are responsible for ensuring the solvency of SPVs during the investment term, i.e. ensuring rental receipts are sufficient to meet all expenses. As of the end of March 2020 the current portfolio had a 90% occupancy rate and tenants were up to date with rental payments, however this position could very quickly change as the lockdown continues. There is no question that SPV solvency risk has increased considerably in the current environment and will increase further if the environment deteriorates further. Currently the average duration of our investment portfolio is 2.5 years, it is our opinion that there is a high probability that over this period the economy and the property market could deteriorate further. In short, there is very high downside risk hence our decision to start marketing the portfolio now.
To clarify, we have only recently started to market for sale, on the open market, the current portfolio of properties but have not accepted any offers. We have a reserve price in mind, and properties will not be sold at any price. At the point the decision was made to start the marketing process we made updates to the online platform in order to ensure all investors were given time to digest the recent developments. We revalued the properties during April at open market prices as agreed with local estate agents. These asking prices are reflected as the latest property valuations on the platform. We then amended the indicative share price to reflect an open market sale achieving 90% of that valuation (with 1.5% transaction fees). This step was taken to be reflective of the market uncertainty currently being faced.
At a time of great uncertainty with an outlook that has multiple hugely diverging outcomes which includes the risk of further deep negativity over a prolonged period of time, we are taking action that we believe is necessary.
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elliotn
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Post by elliotn on Apr 15, 2020 6:19:27 GMT
britishpearl thank you for this context. An economic recovery and reasonable trade deal are just as possible for 2021/2 as your worst case scenario. Property partner have paused dividend payments to bolster spv solvency. Assetz Capital held a user wide vote for their CV19 response. If the majority of investors consider fire sales during a global pandemic and national economic lockdown as the worst possible time to sell (when valuers and buyers have been instructed to stay at home), then you should allow them to decide. A key attraction of this asset class is the long term ownership and voting mechanisms precisely to avoid selling during market panics and property price collapses. (This will be wholly refuted but a cynic may wonder whether BP shareholders are taking the opportunity to cut their considerable losses, thereby forcing investors into losses, as the opposite to any fiduciary care required from asset managers and agents.) Any failure to test investor sentiment may need to be tested against whether guaranteeing immediate losses for retail investors of long term assets is really the preferred course of action at the FCA.
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jester
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Post by jester on Apr 15, 2020 6:54:48 GMT
AIUI... Loan investors will be in front of share investors when a property is sold, so they are in a much stronger position. If a property was sold, loan investors would get all of their capital repaid before share investors got a penny. If this is the case it certainly strengthens my potential for breaking even alongside the joining bonus. Sadly it will be of little use to many investors, but I must look back over the documentation to confirm this position .... or perhaps britishpearl could clarify?? Speaking of which, thankyou britishpearl for contributing to the conversation. It's a tough stance to convince us that selling a long term investment in a stagnant environment immediately following/during a market shock is the best decision for us. It's a lot easier to surmise that alternate issues are driving this decision as elliotn has suggested. Have a long look at your moral compass and failing that, we may have to find someone else to test it!
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Post by British Pearl on Apr 15, 2020 10:08:40 GMT
Dear forum members To clarify the point raised by jester and Ace , Ace is correct in their understanding. Loan investors hold a legal charge over the property as security in the same way that a bank would hold a charge over a property that has been mortgaged. When a property is sold the net proceeds received (after all legal and expenses are paid) are firstly used to pay loan investors interest and principal. The remaining proceeds are then distributed to the share investors. |
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jester
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Post by jester on Oct 14, 2020 18:31:38 GMT
britishpearl it's been 6 long months since we've heard from you on here and approaching 3 months since your last update on site, can you provide any further information on how dissolving the platform is coming along?? How are tenancy levels, especially within the student portfolio? A significant proportion was up for renewal in July but we have heard nothing further. Has the now lengthy pause in dividends and interest kept the SPVs solvent? Obviously the entire portfolio was for sale, is the previously mentioned buyer obtained through Vesta continuing with their intentions to purchase the entire portfolio? This was anticipated to be a loss inducing deal for shareholders but progress in returning our money quickly would go some way to lessening this pain!
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Post by British Pearl on Oct 29, 2020 15:52:57 GMT
Dear jester Thank you for your enquiry, and apologies for not responding sooner. Please note this forum is not actively monitored, in future for a quicker response to your queries please email info@britishpearl.com. Additionally, we expect to distribute a comprehensive update to investors sometime in November. However, I am happy to address the questions you have raised in your message here. “can you provide any further information on how dissolving the platform is coming along??”
I believe you are referring to the sale of the property portfolio however for the sake of clarity I would like to highlight we are not dissolving our platform, i.e. the business, we are selling the property portfolio due to concerns about the risk to rental income and the threat to capital values potentially resulting from two major events – the Covid pandemic and Brexit. “How are tenancy levels, especially within the student portfolio?”
“A significant proportion was up for renewal in July but we have heard nothing further.”
Due to the hard work of our property management team the average occupancy rates of our property portfolio between March and October has been around 85%, and the rental arrears rates have fortunately been zero. You are correct that approximately 25% of our portfolio was subject to the student market and coming up for a tenancy renewal in July, I am happy to say that all those properties are now let. To ensure that we remain competitive in the rental market we have had to reduce rental values in some instances. “Has the now lengthy pause in dividends and interest kept the SPVs solvent?”
Yes, the SPVs are currently solvent, however the board has agreed to continue to pause dividends for two reasons. Firstly, our view on the macro economic environment has not changed and secondly, we are going through a portfolio sales process. It is better to distribute any returns to shareholders as a capital repayment (when the sale completes) rather than a dividend distribution from a taxation perspective, especially when we expect equity holders to experience some losses. It is worth noting that many of the major real estate funds remain suspended to subscriptions and redemptions. “Obviously the entire portfolio was for sale, is the previously mentioned buyer obtained through Vesta continuing with their intentions to purchase the entire portfolio?” This was anticipated to be a loss inducing deal for shareholders but progress in returning our money quickly would go some way to lessening this pain!
The buyer of the entire portfolio sourced by Vesta failed due to personal reasons. Fortunately, recently we have sourced another buyer at a better price and we are now at the stage where lawyers have been instructed to perform due diligence on the portfolio. If the transaction goes ahead under the agreed terms, Loan Investors should expect to recoup all their loan investments including accrued interest, and Share Investors should expect to experience some losses. The size of the loss is yet to be determined, as soon as we know we will share this information with you. We are working hard to conclude the transaction as soon as possible however everything is slower in this environment. For example, the valuation process is slower since it is harder for surveyors to get access to the properties and in some cases they cannot, and the bank lending process is also slower. This is relevant because the buyer is using leverage. I hope we have covered each of your points and please let us know if you have any further questions. Best wishes The British Pearl Team |
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elliotn
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Post by elliotn on Dec 8, 2020 9:09:50 GMT
britishpearl thank you for this context. An economic recovery and reasonable trade deal are just as possible for 2021/2 as your worst case scenario. Property partner have paused dividend payments to bolster spv solvency. Assetz Capital held a user wide vote for their CV19 response. If the majority of investors consider fire sales during a global pandemic and national economic lockdown as the worst possible time to sell (when valuers and buyers have been instructed to stay at home), then you should allow them to decide. A key attraction of this asset class is the long term ownership and voting mechanisms precisely to avoid selling during market panics and property price collapses. (This will be wholly refuted but a cynic may wonder whether BP shareholders are taking the opportunity to cut their considerable losses, thereby forcing investors into losses, as the opposite to any fiduciary care required from asset managers and agents.) Any failure to test investor sentiment may need to be tested against whether guaranteeing immediate losses for retail investors of long term assets is really the preferred course of action at the FCA. Dear britishpearl , I'd like to revisit this after your portfolio update. Residential prices have been on a tear, multiple efficacious vaccines have already or are due to be approved, the government continues to bridge the economy to greater resiliency and Brexit is a pragmatic fishery solution away from a free trade agreement. You concede occupancy is 95% with no arrears and healthy cash reserves. No other property equity crowdfunding decided it necessary for a distressed sale of the whole portfolio at a significant loss - when valuers were not allowed to leave their homes for up to date on-site valuations - particularly without asking the property owners as is the industry standard. Your pessimistic outlook, if not self-serving, has proven meaningfully inaccurate. Of course, an indirect benefit is that your shareholders can reduce losses while you try to pare them by white labelling or exporting your tech. Once up to 25% losses being transferred to retail equity investors have crystallised, I shall robustly test whether you have met your fiduciary role in its entirety in comparison to your peers with the financial ombudsman.
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Post by jonrgrant on Dec 8, 2020 13:00:57 GMT
I think there is a lot more going on than they are saying ie an agenda that is not seen, or maybe they intend to sell the property in the same way that Wellesley sold a loan book recently.
They certainly have not built the company in the way they originally advertised which does not look good for those who became share investors via Seedrs.
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Post by nooneere on Jan 20, 2021 19:11:28 GMT
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Post by Ace on Jan 20, 2021 19:38:12 GMT
Indeed. Someone is getting a good deal and is not going to be us investors. I'm sure it's all above board or the FCA would be all over it to protect us. I find it hard to believe that they think the platform has a future after this.
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jester
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Post by jester on Jan 20, 2021 19:55:52 GMT
Yet another platform where I'm appalled by how we've been treated as investors. We are vunerable to the whim and fancy of the platform owners, the proposition we invest in means nothing and it get's turned on it's head as soon as their profits or growth aren't what they expect.
A fire sale during a pandemic immediately screams madness, then as you say when the housing market is surprisingly buoyant due to the stamp duty reduction we are still in for a loss.
Yet another bunch of unscrupulous suits!
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elliotn
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Post by elliotn on Jan 21, 2021 12:19:35 GMT
One look at their continuous annual losses makes selling our properties as a job lot during a global pandemic when the government specifically prohibited professional valuers from leaving their homes the potentially most egregious act of fiduciary neglect by any company I'm aware of. I posited at the time that a vaccine and Brexit free trade agreement was just as likely as their potentially self-serving end-of-the-world liquidation of our properties. The reason that crowd property equity was my largest portfolio asset was precisely because as the actual owners we decided our own destiny based on pre-determined anniversaries or other ad-hoc onership votes and could not possibly be beholden to unscrupulous borrowers or their agents with interests inimical to ours. britishpearl you are, in my humble opinion, despicable. I'll be seeing you at the Ombudsman. |
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jester
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Post by jester on Mar 8, 2021 16:14:17 GMT
British Pearl sale of portfolio has been agreed and circulated.
100% recovery to loan investors
And minimum 80% recovery for shareholders.
In a buoyant property market it does rather make a mockery of the supposedly fantastic prices they acquired these properties at but I suppose as I'll be close to break even with bonuses and previous dividends I'll run for the hills feeling relieved.
The twist in the tale is that the buyer is a major shareholder of British Pearl and they're selling the transaction as a win for investors as we won't suffer even greater losses on the common market !!
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elliotn
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Post by elliotn on Mar 8, 2021 16:21:37 GMT
britishpearl , you notify us that the best independent offer for our properties would have inflicted losses of 40% on the equity owners. In the light of a Brexit deal, vaccine rollout and extended government tax rebates to home buyers do you stand by your decision to sell our portfolio without consultation? Through the kindness of his heart Fxxk will only inflict losses of 20% on us for our own properties. Considering how preposterously wrong your analysis has been from the outset you must cancel the sale immediately (you have not in any way found a reasonable buyer) and let us continue with our rolling 5 year ownership as we originally bought the properties for. Anything less, and letting your owner profit from our losses in the future, is an apparent unconscionable dereliction of your fiduciary duty.
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Post by knotweed on Mar 8, 2021 16:28:28 GMT
Just got the email from British Pearl, and had to register here (after months of lurking) to express my amazement.
In the most buoyant property market in over a decade, with annualised increases running at 6.9% according to Nationwide, British Pearl have just sold their assets at a knock-down price to their own Chairman.
From exhibiting the bizarre judgement to market the portfolio at literally the worst possible time to be a seller (last April, when valuations were suspended and the market was shut down) to now this insider sale, this has just been astonishing from start to finish.
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