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Post by scepticalinvestor on Mar 22, 2024 17:53:10 GMT
How many ex assetzcapital and property partner investors are investing money here ?
It looks very very similar to Property Partner.
Even with more competence and better luck, there still isn't enough profit to go around and you know what that means.
Buying in and selling up would be the way to do it. Don't wait until no one wants to buy as disposal of the property can be a costly and time consuming drag on your portfolio especially if it is multi-unit.
Property Partner bought badly, overpaying for over-valued property in a poor state and their upbeat prospectus of investor dividends and the visible and not so visible costs turned out to be fantasy. They also had bad luck with the cladding scandal and covid19.
PP definitely had bad luck with cladding but the issues that the pandemic brought (and their inability to profit from the jump in house prices) was because of the way they were structured. I agree, this looks and sounds very similar to PP, which I think was the pioneer in this space, back in 2015. It’s now called London Exchange in an attempt to rebrand away from PP. Not a lot of skin in the game, continued fee income irrespective of how the investment does, multiple layers of management and a potential misalignment between the interests of the platform and the investor. On top of all that you can add questionable RICS valuations to the mix. Not unique to this platform, but a scourge of the sector nevertheless. It can work better than PP, IF they get properties at the right price AND manage them like it was their own property, but like with PP, there’s really no incentive for them to do that, especially if there is plenty of investor interest. And even if everything stacks up, there just isn’t enough fat to keep everyone involved satisfied. I hope it works, but it’ll be interesting to come back to this thread in 5 years time!
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Mar 22, 2024 19:46:29 GMT
How many ex assetzcapital and property partner investors are investing money here ?
It looks very very similar to Property Partner.
Even with more competence and better luck, there still isn't enough profit to go around and you know what that means.
Buying in and selling up would be the way to do it. Don't wait until no one wants to buy as disposal of the property can be a costly (not covered by current valuation) and time consuming drag on your portfolio especially if it is multi-unit.
Property Partner bought badly, overpaying for over-valued property in a poor state and their upbeat prospectus of investor dividends and the visible and not so visible costs turned out to be fantasy. They also had bad luck with the cladding scandal and covid19.
Looks can be deceiving. A somewhat different beast to PP because its P2P not equity ... you are lending money to an SPV to purchase an asset and are paid interest in the form of rent in return. Its little bit of a hybrid as you will also earn an uplift in the capital on disposal (or of course take any loses) Also unlike PP it isnt private renting but operates in the charity sector which has a degree of public backing ie the organisations it deals with are central or local govt (obviously that has its risks) so appear to be much more stable and less subject to the vagaries of the market place ... no void periods. The investments are increasingly long term, inflation linked assets. Seems to be enough profit to go round as AE are profitable and investor returns have been solid.
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Post by scepticalinvestor on Mar 23, 2024 10:15:34 GMT
How many ex assetzcapital and property partner investors are investing money here ?
It looks very very similar to Property Partner.
Even with more competence and better luck, there still isn't enough profit to go around and you know what that means.
Buying in and selling up would be the way to do it. Don't wait until no one wants to buy as disposal of the property can be a costly (not covered by current valuation) and time consuming drag on your portfolio especially if it is multi-unit.
Property Partner bought badly, overpaying for over-valued property in a poor state and their upbeat prospectus of investor dividends and the visible and not so visible costs turned out to be fantasy. They also had bad luck with the cladding scandal and covid19.
Looks can be deceiving. A somewhat different beast to PP because its P2P not equity ... you are lending money to an SPV to purchase an asset and are paid interest in the form of rent in return. Its little bit of a hybrid as you will also earn an uplift in the capital on disposal (or of course take any loses) Also unlike PP it isnt private renting but operates in the charity sector which has a degree of public backing ie the organisations it deals with are central or local govt (obviously that has its risks) so appear to be much more stable and less subject to the vagaries of the market place ... no void periods. The investments are increasingly long term, inflation linked assets. I only got through the first few pages of the thread so didn't realise that they're investing in social housing. Well that was HOME REIT's USP as well - social housing, stable tenants, long term inflation linked rental streams, publicly backed, etc. In their case it turned out that they paid too much for the properties, the valuations were very optimistic, the tenants turned out to be struggling themselves, many went bust, the properties were substandard and (perhaps most damagingly) there was a hidden web of undisclosed outside business interests and undeclared conflicts of interest between certain persons associated with the REIT, managing agents, tenants, vendors and third parties. Hopefully I'm being too pessimistic and I hope AE is able to make it work better than they did and offer a sufficiently large risk premium over comparable investments in the current environment. Compared to FTSE listed HOME REIT, one crucial aspect in AE's favour (doesn't necessarily translate to investors) is that their pool of capital and operations are subject to a lot less scrutiny and regulation so they have a much freer hand in how they deploy and manage it. Only time will tell how it all pans out! From HOME REIT’s launch back in 2020 - "Home REIT announced the result of its initial public offering this morning, and will begin trading on the London Stock Exchange on Monday.
The investment trust is seeking to fund the acquisition and creation of accommodation for homeless people in the UK, while also targeting inflation protected income and capital returns.
The properties will be let on long leases, of around 20 to 30 years, to registered charities, housing associations, community interest companies and other regulated organisations.
Home REIT will be managed by Alvarium Fund Managers and advised by Alvarium Home REIT Advisors.
It is targeting a minimum annual dividend of 5.5p per share from 1 September next year. Net total shareholder return is expected to be about 7.5 per cent a year over the medium term. Home REIT chairman Lynne Fennah said: “We are delighted with the strong response received from a broad range of high calibre investors to our initial public offering – the largest investment trust IPO of this year and the largest UK focussed REIT IPO for over three years.
“We have a substantial, identified pipeline of high-quality, homeless accommodation assets that we expect to acquire and we will now work towards deployment of the net proceeds, providing our new shareholders with secure income and an attractive capital return and at the same time contributing to the fight against homelessness in the UK.”"
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Post by overthehill on Mar 23, 2024 11:02:12 GMT
How many ex assetzcapital and property partner investors are investing money here ?
It looks very very similar to Property Partner.
Even with more competence and better luck, there still isn't enough profit to go around and you know what that means.
Buying in and selling up would be the way to do it. Don't wait until no one wants to buy as disposal of the property can be a costly (not covered by current valuation) and time consuming drag on your portfolio especially if it is multi-unit.
Property Partner bought badly, overpaying for over-valued property in a poor state and their upbeat prospectus of investor dividends and the visible and not so visible costs turned out to be fantasy. They also had bad luck with the cladding scandal and covid19.
Looks can be deceiving. A somewhat different beast to PP because its P2P not equity ... you are lending money to an SPV to purchase an asset and are paid interest in the form of rent in return. Its little bit of a hybrid as you will also earn an uplift in the capital on disposal (or of course take any loses) Also unlike PP it isnt private renting but operates in the charity sector which has a degree of public backing ie the organisations it deals with are central or local govt (obviously that has its risks) so appear to be much more stable and less subject to the vagaries of the market place ... no void periods. The investments are increasingly long term, inflation linked assets. Seems to be enough profit to go round as AE are profitable and investor returns have been solid.
Assetz Exchange sounds identical to Property Partner in every way that matters. Is lending money to an SPV meant to be better than buying shares in an SPV doing exactly the same thing ? Do Assetz Exchange guarantee to repay the loan after x years ?
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,329
Likes: 11,548
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Post by ilmoro on Mar 23, 2024 11:29:58 GMT
Looks can be deceiving. A somewhat different beast to PP because its P2P not equity ... you are lending money to an SPV to purchase an asset and are paid interest in the form of rent in return. Its little bit of a hybrid as you will also earn an uplift in the capital on disposal (or of course take any loses) Also unlike PP it isnt private renting but operates in the charity sector which has a degree of public backing ie the organisations it deals with are central or local govt (obviously that has its risks) so appear to be much more stable and less subject to the vagaries of the market place ... no void periods. The investments are increasingly long term, inflation linked assets. Seems to be enough profit to go round as AE are profitable and investor returns have been solid.
Assetz Exchange sounds identical to Property Partner in every way that matters. Is lending money to an SPV meant to be better than buying shares in an SPV doing exactly the same thing ? Do Assetz Exchange guarantee to repay the loan after x years ?
You mean other than its secured lending with investors at the front of the queue for repayment rather than at the back? Yes, same degree of exposure to the housing market so that is a parallel. Interestingly PP seems to be moving in the direction of AE with the mortgage bonds and ultimately may actually be a better (no pun intended) bet in terms of risk/return if the platform hadnt shot its credibility with the mess it made of the equity model.
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Post by overthehill on Mar 23, 2024 12:51:29 GMT
Assetz Exchange sounds identical to Property Partner in every way that matters. Is lending money to an SPV meant to be better than buying shares in an SPV doing exactly the same thing ? Do Assetz Exchange guarantee to repay the loan after x years ?
You mean other than its secured lending with investors at the front of the queue for repayment rather than at the back? Yes, same degree of exposure to the housing market so that is a parallel. Interestingly PP seems to be moving in the direction of AE with the mortgage bonds and ultimately may actually be a better (no pun intended) bet in terms of risk/return if the platform hadnt shot its credibility with the mess it made of the equity model.
Property Partner is secured lending 1st or 2nd charge depending on whether the property had a 50% mortgage or not.
Mortgage bonds were a neat idea to placate existing investors if you still had any faith or trust left, I didn't. There may be a possibility to go external but would the rates be high enough? The current bonds are attractive because of three things, the punitively high bank mortgage rates again due to PP, the fact some of these properties could take years just to sell half the units and you get to exit long before the worst units are sold off.
As evidence, I've got a property with a final unit valuation of 180k and it's being sold for 120k subject to a vote. Like I've said before, almost every update from PP over the last 5 years has reduced the value of my portfolio and brings my 7.5 year profit nearer to £0.
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eeyore
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Post by eeyore on Mar 23, 2024 13:19:07 GMT
... Also unlike PP it isn't private renting but operates in the charity sector which has a degree of public backing ie the organisations it deals with are central or local govt (obviously that has its risks) so appear to be much more stable and less subject to the vagaries of the market place ... no void periods. The investments are increasingly long term, inflation linked assets. Seems to be enough profit to go round as AE are profitable and investor returns have been solid. Just a minor clarification in case someone new to AE might be confused: The rental income on recent AE loans is inflation-linked; the value of the asset, the property itself, is not inflation-linked but will increase/decrease in line with local property values. I'd also add to this discussion the caveat that the initial monetary value for most (all?) loans is greater than the price paid for the property (and thus the likely sale value), ie a LTV >100%. So any expectation that the capital return on the sale of the property at end of the loan's term will be greater than the loan should be muted. My speculation is that many loans, especially the loans with a 5-year term, will be renewed, possibly indefinitely. Fortunately, the secondary market is active - all post-2020 loans* can be bought or sold, if the buyer is willing to pay high enough or the seller is willing to accept a low enough price. * Loans since Dec 2020 when AE changed the nature of the properties offered for investment.
Disclosure: I have a few tens of thousands invested in 30-odd loans at AE
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,329
Likes: 11,548
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Post by ilmoro on Mar 23, 2024 13:23:38 GMT
You mean other than its secured lending with investors at the front of the queue for repayment rather than at the back? Yes, same degree of exposure to the housing market so that is a parallel. Interestingly PP seems to be moving in the direction of AE with the mortgage bonds and ultimately may actually be a better (no pun intended) bet in terms of risk/return if the platform hadnt shot its credibility with the mess it made of the equity model.
Property Partner is secured lending 1st or 2nd charge depending on whether the property had a 50% mortgage or not.
Mortgage bonds were a neat idea to placate existing investors if you still had any faith or trust left, I didn't. There may be a possibility to go external but would the rates be high enough? The current bonds are attractive because of two things, the punitively high mortgage rates again due to PP and the fact some of these properties could take years just to sell half the units.
PP is some secured lending (the bonds & PDLs), the bulk is equity investment which is not secured though has an element of comparable security due to the companies being single asset entities. However, shareholders still rank behind any other creditors. Other difference of course is the taxation ... PP earnings (outside of the loans) is largely taxable as dividends and CGT, AE (bar 3 original properties) is income tax (with its loss relief component) & CGT,
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,329
Likes: 11,548
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Post by ilmoro on Mar 23, 2024 13:49:24 GMT
... Also unlike PP it isn't private renting but operates in the charity sector which has a degree of public backing ie the organisations it deals with are central or local govt (obviously that has its risks) so appear to be much more stable and less subject to the vagaries of the market place ... no void periods. The investments are increasingly long term, inflation linked assets. Seems to be enough profit to go round as AE are profitable and investor returns have been solid. Just a minor clarification in case someone new to AE might be confused: The rental income on recent AE loans is inflation-linked; the value of the asset, the property itself, is not inflation-linked but will increase/decrease in line with local property values. I'd also add to this discussion the caveat that the initial monetary value for most (all?) loans is greater than the price paid for the property (and thus the likely sale value), ie a LTV >100%. So any expectation that the capital return on the sale of the property at end of the loan's term will be greater than the loan should be muted. My speculation is that many loans, especially the loans with a 5-year term, will be renewed, possibly indefinitely. Fortunately, the secondary market is active - all post-2020 loans* can be bought or sold, if the buyer is willing to pay high enough or the seller is willing to accept a low enough price. * Loans since Dec 2020 when AE changed the nature of the properties offered for investment.
Disclosure: I have a few tens of thousands invested in 30-odd loans at AEThanks. Minor correction, not just post 2020 properties tradeable, everything is unless paused due to an material update.
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Post by BenAssetzExchange on Mar 25, 2024 11:47:55 GMT
Looks can be deceiving. A somewhat different beast to PP because its P2P not equity ... you are lending money to an SPV to purchase an asset and are paid interest in the form of rent in return. Its little bit of a hybrid as you will also earn an uplift in the capital on disposal (or of course take any loses) Also unlike PP it isnt private renting but operates in the charity sector which has a degree of public backing ie the organisations it deals with are central or local govt (obviously that has its risks) so appear to be much more stable and less subject to the vagaries of the market place ... no void periods. The investments are increasingly long term, inflation linked assets. Seems to be enough profit to go round as AE are profitable and investor returns have been solid.
Assetz Exchange sounds identical to Property Partner in every way that matters. Is lending money to an SPV meant to be better than buying shares in an SPV doing exactly the same thing ? Do Assetz Exchange guarantee to repay the loan after x years ?
When Assetz Exchange was originally conceived and launched the aim was to buy properties to let as traditional buy-to-lets on standard ASTs and this is what the first few properties were. You are absolutely right in your opening comments that there just wasn't enough profit to go around and that soon became apparent. The problems were you still had to pay a managing agent to find the tenants and manage the property (typically up to 10% of rent), many tenants were leaving every 6-months which led to voids and new tenant fees (usually £3-400), repairs and maintenance were a drag on yields and significantly it was a lot of admin, constantly having to deal with and badger the managing agents to do what they were supposed to do. This meant a lot of work for the platform and there wasn't really any room to take a fee to pay for the running of the platform. Yields of around 4% (with little to no margin for us) were just about passable for investors when interest rates were at 0% but obviously in a higher interest rate environment they are not attractive at all, even with rents having gone up. It was because of these reasons we quickly decided to pivot into supported living. The main advantages being that rent is higher, leases are long (5y+) and usually renewed (so no voids), rent is usually is usually linked to inflation, the rent is often ultimately paid by local or central government, the tenant (ie the housing association) is usually responsible for repairs and simply inform us they are doing them and of course there is the social aspect. We are now seeing gross yields of 10%+ which means after we take a fee that makes the business viable and money for any refurbishment costs we can offer net 7-8% to investors who can also potentially benefit from capital growth. That is a much more attractive proposition both for us and the investor. On top of that I understand PP properties were often leveraged which we have avoided. I think they ran into difficulties during Covid where some of their flats became vacant but they still had to pay the mortgages and also the rise in interest rates on BTL mortgages would be painful when for many BTL properties rental yields are fairly low. I don't think any platform can ever really guarantee a loan will be repaid. I do have to say however that our model now is based on leases being renewed and so the loans will keep rolling (unless investors vote to physically sell). If investors want to exit then it makes more sense to sell on our secondary market as they then recoup their upfront costs. Our original model was to sell immediately after 5-years but in my view this was never a viable model. When you sell the upfront purchase costs (stamp duty, legal fees, and work required) and of course there are costs involved with selling. This may be ok when house prices are going up 10% a year but as we have seen you can't rely on that and it simply did not make sense to sell an investment property to buy another property incurring more upfront and selling costs.
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Post by BenAssetzExchange on Mar 25, 2024 12:04:12 GMT
Looks can be deceiving. A somewhat different beast to PP because its P2P not equity ... you are lending money to an SPV to purchase an asset and are paid interest in the form of rent in return. Its little bit of a hybrid as you will also earn an uplift in the capital on disposal (or of course take any loses) Also unlike PP it isnt private renting but operates in the charity sector which has a degree of public backing ie the organisations it deals with are central or local govt (obviously that has its risks) so appear to be much more stable and less subject to the vagaries of the market place ... no void periods. The investments are increasingly long term, inflation linked assets. I only got through the first few pages of the thread so didn't realise that they're investing in social housing. Well that was HOME REIT's USP as well - social housing, stable tenants, long term inflation linked rental streams, publicly backed, etc. In their case it turned out that they paid too much for the properties, the valuations were very optimistic, the tenants turned out to be struggling themselves, many went bust, the properties were substandard and (perhaps most damagingly) there was a hidden web of undisclosed outside business interests and undeclared conflicts of interest between certain persons associated with the REIT, managing agents, tenants, vendors and third parties. Hopefully I'm being too pessimistic and I hope AE is able to make it work better than they did and offer a sufficiently large risk premium over comparable investments in the current environment. Compared to FTSE listed HOME REIT, one crucial aspect in AE's favour (doesn't necessarily translate to investors) is that their pool of capital and operations are subject to a lot less scrutiny and regulation so they have a much freer hand in how they deploy and manage it. Only time will tell how it all pans out! From HOME REIT’s launch back in 2020 - "Home REIT announced the result of its initial public offering this morning, and will begin trading on the London Stock Exchange on Monday.
The investment trust is seeking to fund the acquisition and creation of accommodation for homeless people in the UK, while also targeting inflation protected income and capital returns.
The properties will be let on long leases, of around 20 to 30 years, to registered charities, housing associations, community interest companies and other regulated organisations.
Home REIT will be managed by Alvarium Fund Managers and advised by Alvarium Home REIT Advisors.
It is targeting a minimum annual dividend of 5.5p per share from 1 September next year. Net total shareholder return is expected to be about 7.5 per cent a year over the medium term. Home REIT chairman Lynne Fennah said: “We are delighted with the strong response received from a broad range of high calibre investors to our initial public offering – the largest investment trust IPO of this year and the largest UK focussed REIT IPO for over three years.
“We have a substantial, identified pipeline of high-quality, homeless accommodation assets that we expect to acquire and we will now work towards deployment of the net proceeds, providing our new shareholders with secure income and an attractive capital return and at the same time contributing to the fight against homelessness in the UK.”" You are absolutely right what you said about HOME REIT. The problems are well documented but for me it all boils down to a complete lack of transparency. You were effectively investing in a black box(hole) where you had to rely that what you were being told is the truth. My understanding is that they were buying properties, signing long term leases with (questionable) counterparties and then using a commercial property valuation model to dramatically restate the value of the property which on a portfolio basis meant disclosing an inflated NAV which is the main factor investors were using to value the shares. On top of that there were lots of undisclosed conflicts of interest. Because of this they didn't really care what price they paid for a property as they were going to restate the value higher anyway. So for example they may pay £200k for a property worth £150k. Arrange a 20y lease with a dubious counterparty and then mark the value as £300k. You can see why the share price fell so dramatically once all of this came to light. From Assetz Exchange's perspective I can say we are totally transparent. Each individual property is given to investors as a stand alone proposition with all the information, there is no pooled investing. We disclose the purchase price, what money needs spending on the property, the stamp duty, legal fees and our fee). We also commission an independent RICS valuation of the property. We do not revalue our properties (unless investors want a new valuation survey commissioned), we simply display the change in Land Registry prices for the area since the purchase date as a guide. We take care not to overpay for properties and our underwriters keep us in check on that. Investors also make all major decisions once a property has been bought.
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Post by Mr Baggy on May 16, 2024 15:14:03 GMT
Any thoughts on today's update regarding the properties in Nottingham.
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dave4
Member of DD Central
Cynical is a hobby not a lifestyle
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Post by dave4 on May 16, 2024 15:54:31 GMT
Any thoughts on today's update regarding the properties in Nottingham. Funding being pulled by authorities has always been a worry concern for me. Hoping that the property is returned in good order and new tenants found ASAP, or I see a potential loss.
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Post by frank121 on May 16, 2024 16:51:43 GMT
Any thoughts on today's update regarding the properties in Nottingham. Funding being pulled by authorities has always been a worry concern for me. Hoping that the property is returned in good order and new tenants found ASAP, or I see a potential loss. Interesting update. Indeed this is one of the main risks but in theory quite low as the local authority contracts are normally stable and long term. Hopefully they can find a new provider otherwise it's very unlikley the full FCC costs can be recovered even with the 20% increase in value showing. (according to the HPI data vs original RICS) We will just have to see how easy it is for AE to find another provider; I assume it normally works in reverse - they find the provider first and then scout for a suitable property to accomdate their needs etc.
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Post by Mr Baggy on May 16, 2024 17:01:08 GMT
Do we know what the scheme was that the local authorities are pulling out of
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