Post by stevefindlay on May 29, 2019 12:49:11 GMT
Dear P2P Forumers - please find below a copy of an email we've just sent to our clients.
This is obviously a difficult decision for our Company, but one we feel is important given the market conditions and to act in the best interests of our clients. Please note: our loan book is still performing in line with expectations; we do expect clients to get their capital and interest back, and subject to the outcome of COL (which is c.2% of the loan book) we are hopeful that we can protect our performance of no client making a loss with BM, and the average return being 5-6% p.a. The next 12-18 months will tell as we work hard to collect in the loans.
Doing the right thing - putting our clients first
Since launching in 2015, we have always put our clients first, and today is no exception.
We have been very pleased to deliver our clients an average net return of 6% per annum over the last 3 years. Some of our earliest clients have achieved a total return in excess of 20%.
However, for reasons that I explain in further detail below, the team at BondMason feels it is unlikely that we will be able to deliver the same attractive returns over the coming years through our BondMason Core service, in which your money is invested.
As the CEO of BondMason, I feel strongly that it is better to stop our clients investing their funds now and collect the underlying loans, which continue to perform in line with our expectations and past performance; than write a letter in 2-3 years’ time to explain disappointing returns.
I know this will be disappointing news to many clients, and it is a difficult decision for our Company. But I believe it is in our clients’ best interests, and the right thing to do.
The information below sets out the process for returning your funds as we receive back the interest and capital from the underlying loans, and proceed to wind-down the BondMason Core product.
Looking ahead
The property market has many different facets and we are continually seeking new opportunities for investment that can offer an attractive, risk-adjusted return for our clients.
We have identified a property-based investment service that is built on a long-term trend and market need, which we have been following for some time. We consider that the investment case is compelling, and this is something we are excited about.
As soon as we have finalised the details in the coming weeks, we will provide you with further information. (I would like to add though, that the launch of this new service is not linked to the decision to wind-down the BondMason Core service – they were intended to be sister services).
Thank you again for your support, and we wish you continued success with your investment activities, and we hope to be able to assist you again in the near future.
Yours sincerely,
Steve
Stephen Findlay
Chief Executive
BondMason
Further detail
Our clients have benefitted from attractive, risk-adjusted returns sourced from direct lending, including peer-to-peer lending and property-backed lending. We are proud of our clients’ returns*:
clients have achieved an average net return of 6% p.a.;
- £55M+ invested over 4 years;
- £20M+ of current client funds;
- £2M+ of net interest paid (after defaults and losses); and
- no client has experienced a net loss, with total write-offs currently standing at less than 0.5%.
*Performance statistics based on the current valuation of the underlying portfolio, which is performing in line with expectations and past performance, and includes accrued interest due to clients. The final picture will be known in 12-18 months once all the underlying positions have repaid.
Over the last 5 years we have seen more and more institutional investors enter the property lending market, seeking to achieve attractive returns. This influx of new capital has led to a reduction in rates payable by borrowers (which is good for borrowers, but not great for lenders), and a reduction in the availability of attractive lending opportunities.
From our Company’s perspective, we are also experiencing an increase in operational costs, including from insurance, regulatory compliance and client acquisition, as the market responds to the failure of some operators in the space. As a business, we are reluctant to pass these costs on to our clients.
Looking ahead, we are concerned about economic uncertainty, and the impact on lender returns. We now find ourselves in a position whereby we predict that over the next few years it will be increasingly difficult for us to continue to enable clients to achieve an attractive' risk-adjusted return from our property-backed BondMason Core lending model.
We feel strongly that a net return to clients of 3-4% p.a. or so, after considering the impact of additional operational costs, and the continuing regulatory costs associated with our innovative investment model, is not commensurate with the risk clients would be taking with their capital in this sector; even if we were to put an alternative structure in place such as a fund, which may also include a provision fund.
It is for these reasons, effective immediately, we have taken the decision to put our BondMason Core service into wind-down. We would like to reassure clients that this should mean that we do not anticipate a material change in the performance of your investments as the underlying loans repay, and we expect them to run their normal course and deliver the usual level of returns.
Given that property-backed development loans are typically 9-12 months in duration, we must always look ahead, to assess the continuing viability of the investment strategy and our proposition in this area. It is difficult to predict whether and how lending rates will continue to drop, and what the economy has in store over the near term. But we feel it is important to review investment strategies on an ongoing basis, and take decisions early. We would rather get the timing wrong by taking risk off the table too soon, than leave capital exposed for too long. Particularly where there is no opportunity for upside – as in lending. Our focus should be on protecting against the downside risks.
We would like to thank all of our clients who have entrusted us with their capital to date; and we hope that this decision - which has been a difficult one for our company, but which we believe is in the best interests of our clients – reflects our commitment to always put our clients first.
We believe the investment management industry is built on trust, and operators should be the careful custodians of their clients’ capital, taking a long-term view. We hope our actions today, and always, reflect this sentiment.
What happens next?
Existing clients will automatically receive monthly repayments into their nominated bank account at the end of each month as the underlying loans repay capital and interest. Any clients wishing to call us to discuss their account can continue to do so: invest@bondmason.com or 01582 802 000.
We expect half of funds to be returned within 6 months and the significant majority of funds to be repaid within 12-18 months. The receivables book is expected to repay as follows:
As each client has a unique portfolio of receivables, the exact amount received by each client may vary each month, and may be more, or less, than that shown in the indicative charts above. Underlying borrowers may also repay loans faster, or slower, than anticipated.
You will be able to view the status of your account via your dashboard. Please note: there is a new website address for viewing your BondMason Core investment account at: www.bondmasoncore.com
I will also be hosting a series of webinars over the coming few days to enable us to discuss this decision with any clients that should wish to, first hand. If you would like to participate in a webinar, please email Rach at rachel.billington@bondmason.com with your preferred time:
- Thursday, May 30th at 10am
- Thursday, May 30th at 4pm
- Friday, May 31st at 12noon
- Monday, June 3rd at 3pm
If there is demand for other times, we may organise further webinars, to seek to ensure everyone who would like to participate is able to.
In the meantime, you may find our FAQ page answers any questions you may have.
FAQs
This is obviously a difficult decision for our Company, but one we feel is important given the market conditions and to act in the best interests of our clients. Please note: our loan book is still performing in line with expectations; we do expect clients to get their capital and interest back, and subject to the outcome of COL (which is c.2% of the loan book) we are hopeful that we can protect our performance of no client making a loss with BM, and the average return being 5-6% p.a. The next 12-18 months will tell as we work hard to collect in the loans.
Doing the right thing - putting our clients first
Since launching in 2015, we have always put our clients first, and today is no exception.
We have been very pleased to deliver our clients an average net return of 6% per annum over the last 3 years. Some of our earliest clients have achieved a total return in excess of 20%.
However, for reasons that I explain in further detail below, the team at BondMason feels it is unlikely that we will be able to deliver the same attractive returns over the coming years through our BondMason Core service, in which your money is invested.
As the CEO of BondMason, I feel strongly that it is better to stop our clients investing their funds now and collect the underlying loans, which continue to perform in line with our expectations and past performance; than write a letter in 2-3 years’ time to explain disappointing returns.
I know this will be disappointing news to many clients, and it is a difficult decision for our Company. But I believe it is in our clients’ best interests, and the right thing to do.
The information below sets out the process for returning your funds as we receive back the interest and capital from the underlying loans, and proceed to wind-down the BondMason Core product.
Looking ahead
The property market has many different facets and we are continually seeking new opportunities for investment that can offer an attractive, risk-adjusted return for our clients.
We have identified a property-based investment service that is built on a long-term trend and market need, which we have been following for some time. We consider that the investment case is compelling, and this is something we are excited about.
As soon as we have finalised the details in the coming weeks, we will provide you with further information. (I would like to add though, that the launch of this new service is not linked to the decision to wind-down the BondMason Core service – they were intended to be sister services).
Thank you again for your support, and we wish you continued success with your investment activities, and we hope to be able to assist you again in the near future.
Yours sincerely,
Steve
Stephen Findlay
Chief Executive
BondMason
Further detail
Our clients have benefitted from attractive, risk-adjusted returns sourced from direct lending, including peer-to-peer lending and property-backed lending. We are proud of our clients’ returns*:
clients have achieved an average net return of 6% p.a.;
- £55M+ invested over 4 years;
- £20M+ of current client funds;
- £2M+ of net interest paid (after defaults and losses); and
- no client has experienced a net loss, with total write-offs currently standing at less than 0.5%.
*Performance statistics based on the current valuation of the underlying portfolio, which is performing in line with expectations and past performance, and includes accrued interest due to clients. The final picture will be known in 12-18 months once all the underlying positions have repaid.
Over the last 5 years we have seen more and more institutional investors enter the property lending market, seeking to achieve attractive returns. This influx of new capital has led to a reduction in rates payable by borrowers (which is good for borrowers, but not great for lenders), and a reduction in the availability of attractive lending opportunities.
From our Company’s perspective, we are also experiencing an increase in operational costs, including from insurance, regulatory compliance and client acquisition, as the market responds to the failure of some operators in the space. As a business, we are reluctant to pass these costs on to our clients.
Looking ahead, we are concerned about economic uncertainty, and the impact on lender returns. We now find ourselves in a position whereby we predict that over the next few years it will be increasingly difficult for us to continue to enable clients to achieve an attractive' risk-adjusted return from our property-backed BondMason Core lending model.
We feel strongly that a net return to clients of 3-4% p.a. or so, after considering the impact of additional operational costs, and the continuing regulatory costs associated with our innovative investment model, is not commensurate with the risk clients would be taking with their capital in this sector; even if we were to put an alternative structure in place such as a fund, which may also include a provision fund.
It is for these reasons, effective immediately, we have taken the decision to put our BondMason Core service into wind-down. We would like to reassure clients that this should mean that we do not anticipate a material change in the performance of your investments as the underlying loans repay, and we expect them to run their normal course and deliver the usual level of returns.
Given that property-backed development loans are typically 9-12 months in duration, we must always look ahead, to assess the continuing viability of the investment strategy and our proposition in this area. It is difficult to predict whether and how lending rates will continue to drop, and what the economy has in store over the near term. But we feel it is important to review investment strategies on an ongoing basis, and take decisions early. We would rather get the timing wrong by taking risk off the table too soon, than leave capital exposed for too long. Particularly where there is no opportunity for upside – as in lending. Our focus should be on protecting against the downside risks.
We would like to thank all of our clients who have entrusted us with their capital to date; and we hope that this decision - which has been a difficult one for our company, but which we believe is in the best interests of our clients – reflects our commitment to always put our clients first.
We believe the investment management industry is built on trust, and operators should be the careful custodians of their clients’ capital, taking a long-term view. We hope our actions today, and always, reflect this sentiment.
What happens next?
Existing clients will automatically receive monthly repayments into their nominated bank account at the end of each month as the underlying loans repay capital and interest. Any clients wishing to call us to discuss their account can continue to do so: invest@bondmason.com or 01582 802 000.
We expect half of funds to be returned within 6 months and the significant majority of funds to be repaid within 12-18 months. The receivables book is expected to repay as follows:
As each client has a unique portfolio of receivables, the exact amount received by each client may vary each month, and may be more, or less, than that shown in the indicative charts above. Underlying borrowers may also repay loans faster, or slower, than anticipated.
You will be able to view the status of your account via your dashboard. Please note: there is a new website address for viewing your BondMason Core investment account at: www.bondmasoncore.com
I will also be hosting a series of webinars over the coming few days to enable us to discuss this decision with any clients that should wish to, first hand. If you would like to participate in a webinar, please email Rach at rachel.billington@bondmason.com with your preferred time:
- Thursday, May 30th at 10am
- Thursday, May 30th at 4pm
- Friday, May 31st at 12noon
- Monday, June 3rd at 3pm
If there is demand for other times, we may organise further webinars, to seek to ensure everyone who would like to participate is able to.
In the meantime, you may find our FAQ page answers any questions you may have.
FAQs
