shimself
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Post by shimself on Mar 1, 2021 19:55:06 GMT
In a private email to the boss of a rival business with some knowledge he assumed that it was the Dev projects that dragged the company down. Actually do I gather they seem to be afloat?
I can understand the original p2p spv BTL venture going under, because it didn't really work out, the properties didn't increase in value, the rents barely covered the outgoings. So perhaps what's happening us that FF is getting shot of the headache.
Or not
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mikeb
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Post by mikeb on Mar 2, 2021 13:40:42 GMT
In a private email to the boss of a rival business with some knowledge he assumed that it was the Dev projects that dragged the company down. Actually do I gather they seem to be afloat?
I can understand the original p2p spv BTL venture going under, because it didn't really work out, the properties didn't increase in value, the rents barely covered the outgoings. So perhaps what's happening us that FF is getting shot of the headache.
Or not
I would say "or not" here. The earlier BTL SPVs have been being systematically sold off (the earlier ones without any vote from the shareholders, as the T&C said THC could sell the property when their property team[1] felt it was the right time[2]). The later ones did come with a vote to sell/hold/accept/reject offers etc. So even though these were touted as LONG TERM investments, with a clear commitment to tie up your money for many years, with "penalties" to cut and run (legal costs in transfer of shares, forfeiture of any capital uplift) these have been bailing out (with a mixture of capital uplift+interest at end/no uplift, just interest/small loss/medium loss) select as appropriate. [1] See also Funding Circle "experienced property team" [2] Remember when Gordon Brown sold the gold? Buy high, sell low!
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p2pfan
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Post by p2pfan on Mar 2, 2021 15:46:38 GMT
The process of selling assets has already begun and one of The House Crowd's biggest developments, Downs Quarter, is being sold off by the LPA receiver "to recover a charge for developer Consensus Property." With no reference in the article to P2P lenders who lent to this project via THC in its various tranches, I fear we'll get left at the bottom of the pile with nothing. |
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ilmoro
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Post by ilmoro on Mar 2, 2021 16:06:14 GMT
The process of selling assets has already begun and one of The House Crowd's biggest developments, Downs Quarter, is being sold off by the LPA receiver "to recover a charge for developer CP." With no reference in the article to P2P lenders who lent to this project via THC in its various tranches, I fear we'll get left at the bottom of the pile with nothing. Always complicated when there is another charge holder. Not clear but I suspect this is a second charge as it appears to relates to a deferred payment of purchase price £2.1m due plus 4% interest from Jun 20. Complicated by failure to register charge properly. HC may decide to take control themselves & appoint admins under floating charge to protect lenders interest. If HC have first charge then lenders won't lose out to CP. IIRC there is one other development with a third party charge. Only seem to be 9 HCD developments underway according to website
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p2pfan
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Post by p2pfan on Mar 2, 2021 22:26:38 GMT
The process of selling assets has already begun and one of The House Crowd's biggest developments, Downs Quarter, is being sold off by the LPA receiver "to recover a charge for developer CP." With no reference in the article to P2P lenders who lent to this project via THC in its various tranches, I fear we'll get left at the bottom of the pile with nothing. Always complicated when there is another charge holder. Not clear but I suspect this is a second charge as it appears to relates to a deferred payment of purchase price £2.1m due plus 4% interest from Jun 20. Complicated by failure to register charge properly. HC may decide to take control themselves & appoint admins under floating charge to protect lenders interest. If HC have first charge then lenders won't lose out to CP. IIRC there is one other development with a third party charge. Only seem to be 9 HCD developments underway according to website You're right. It's a complicated state of affairs, as there are five separate charges. The one from Consensus Property does refer to "first fixed charge" in clause 3.1.2. There are four from "House Crowd Finance (Security Agent)Limited" which one presumes is HC's P2P charge. I have no idea where they rank in the pecking order.
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ilmoro
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Post by ilmoro on Mar 2, 2021 23:54:07 GMT
Always complicated when there is another charge holder. Not clear but I suspect this is a second charge as it appears to relates to a deferred payment of purchase price £2.1m due plus 4% interest from Jun 20. Complicated by failure to register charge properly. HC may decide to take control themselves & appoint admins under floating charge to protect lenders interest. If HC have first charge then lenders won't lose out to CP. IIRC there is one other development with a third party charge. Only seem to be 9 HCD developments underway according to website You're right. It's a complicated state of affairs, as there are five separate charges. The one from Consensus Property does refer to "first fixed charge" in clause 3.1.2. There are four from "House Crowd Finance (Security Agent)Limited" which one presumes is HC's P2P charge. I have no idea where they rank in the pecking order. Well normally they rank in order unless there is a deed of priority but that is only recorded at the land registry. Im not entirely convinced the first fixed charge wording isnt just formula. The HC has three charges from the 30th Jan, the first is a fixed charge over the part of the site, the second is a charge over the sales contract, and the last is the debenture over the SPV. There is a fourth charge from June which covers another part of the site not covered by the first charge for some reason. Maybe the site was bought in stages. The final charge is the third party one which covers the whole site to protect the deferred payment. This one on paper ranks last due to the delay in filing but is dated the same as the fourth charge. All the HC charges are in favour of the Security Trustee so all should cover the P2P lenders. Unfortunately because its receivers there wont be any proposals or reports to clarify the position as there are no statutory reporting requires outside income & expenditure accounts.
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cmburns
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Post by cmburns on Mar 3, 2021 14:01:00 GMT
I am a small lender. £3k invested in HCP137 (Stockport) which is 'a large combination retail and residential unit in an excellent location in Stockport consisting of 4 x 2-bed flats, 6 x 1-bed flats and 2 retail units in a lovely building in a conservation area. The property is now fully let and the barbershop has asked for a 10-year lease on his unit. We will be looking to increase rentals as tenants leave and new ones arrive.' Purchased 6 years ago. Dividends received to date are just under £360 so 12% over 6 years. The explanation for poor earnings, I think, is that management and maintenance costs were higher than expected. Valued at £1m in 2018 and offered for sale in 2019. According to THC there have been offers but none at an acceptable level. Revaluation in mid-2020 came out at £725-750k due to pandemic, apparently. You would expect something to be rescuable from this property especially if it remains fully let but I expect that any proceeds will go to the adminstrators, lawyers, agents, valuers etc rather than to lenders.I’m not in this investment nor any on THC. Hadn’t given THC an iota of thought before the last couple of days. 137, like presumably a lot of THC products, is an SPV, presumably holding the property portfolio mentioned. The SPV has 769 B shares,nominal £1,000 each, held by p2pers and 1 A share, nominal value £1, held by THC that, I believe, entitles THC to 25% of any excess on wind up after returning £1,000 per B share. I’m in HCP137 too, as well as a couple of other HCPs. I am also in HCBC1.
Overall, my investments have performed at a portfolio average return of around 4% p.a. prior to 2020, so in income terms fairly comparable to doing a personal BTL, albeit below FF’s ambitious income forecasts back in 2015. I did, by the way, think these forecasts were a bit high at the time I invested, but I still thought that the idea of getting a security-backed 4-6% p.a. with potential for some capital gain was interesting.
I had been looking to reduce my exposure prior to the pandemic in particular with HCBC1 because, not knowing specifically where that money was going, I had no way of understanding the risk exposure to my funds or whether getting 7% p.a. was reasonable compensation for that risk. Unfortunately I should have gone with my instinct on that one a bit earlier.
With respect to HCP137 specifically, this project (which as Deees said, is a separately incorporated SPV, House Crowd Project 137 Limited) had a rental income of around £64K last year and a profit before tax of £32.5K. (Or £44K prior to HCPML taking their 25% share). That looks like a viable independent company to me and I don’t see why shareholders should have to accept the underlying asset being quickly sold off at a deep discount.
House Crowd Property Management Limited had the role of assisting with the management of HCP 137 Ltd and as Deees also says via 1 x A Preference Share they have a right to 25% of any capital gain on disposal and also 25% of annual profits after expenses (which amounted to about £11K last year).
FF is still the Director of HCP137 Ltd and therefore still has the responsibility to act in the best interests of the shareholders, which I guess could in theory could also include moving the administrative management of HCP137 away from HCPML.
So to summarise… with HCP137 most of our invested capital should be safe in my opinion. I would go with 80%+ as things stand right now. While noting that some shareholders may want to get some of their money back quickly and therefore may prefer to accept a greater capital loss through a quick sale of the asset, personally I don’t mind being patient with this one.
With the other smaller HCPs, because the income is so much lower it makes them seem a bit less viable as independent multiple shareholder companies to me without THC coordinating things. I expect to have a (hopefully) just a small capital loss on one and possibly a small gain on the other. With HCBC1 I am not sure what will happen, I guess it just depends which projects those funds were put into.
Sorry, I can’t say anything about the other House Crowd products because I don’t know how they were structured, although initial comments here suggest that some of them were much more complicated than the HCPs. GLA.
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daves
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Post by daves on Mar 4, 2021 11:25:43 GMT
cmburns I'm keeping my fingers crossed for you.
I wasn't in HCP137. I was in quite a few other of their House Crowd Development projects.
While there may theoretically be money in all these developments that ought to go to the creditors, once the grubby 'suits' get their hands on these Administration processes, they usually squeeze every remaining penny for themselves. I've emailed the Administrators via the email address provided a few times, but no response. I'm sure they'll be overwhelmed. The Administration notice on the HC website says creditors should be hearing from them very soon, so let's see if that happens.
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Post by superowls1 on Mar 4, 2021 14:03:23 GMT
Just thought I would join the chat and say hello.
I have been investing with THC for about 6 years now and must have been fairly lucky that I have always seen a positive return (up until now of course).
I currently have 1 HCP, 8 live HCD (although 2 have had full capital returned) and 1 ISA investment.
With regards to the Downs conversation to which I am an investor, the land was purchased in stages and IIRC in September 2020 there was a threat that receivers could be brought in by the vendor which meant that HCD had to take the funding from elsewhere and reduced our security to second charge giving priority to the new lender. They were going to issue another fundraiser, but decided with the pandemic there was no guarantee they could get the funds needed, it was said that it would safeguard the investors funds (but here we are).
GLA.
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Post by lisao on Mar 4, 2021 17:42:58 GMT
Hi All,
Does anybody who (semi) understands these things, know what the implications are in terms of the statements on administration?. According to the email sent to investors, which differs slightly from the statement on the THC website, House Crowd Developments (HCD) is not in administration, and The House Crowd Property (“HCP”) special investment vehicles are also not in administration and "will continue to operate as normal".
What does this mean with respect to The House Crowd Limited (“THC”) and THC’s wholly owned subsidiaries House Crowd Finance Limited, House Crowd Finance (Security Agent) and House Crowd Property Management Limited being placed into administration?
Do the administrators have control over HCD and HCP investments, or not, because they are not in administration?
Presumably with their Auto-invest products (which I have invested in), it's hard to say what's happening without knowing where funds were invested? (past stats to end of 2019 indicated approx. 60% in developments and 40% in loans)
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Post by jonathan24 on Mar 4, 2021 18:33:16 GMT
I'm also an investor in THC, mainly in the development projects. Most of these did seem to be advancing reasonably well towards completion (albeit, still rather delayed) and so I'm hopeful that these will be allowed to progress to completion and any sales proceeds will fund the rest of the development. However, the projects I'm concerned about are The Downs and Chapel Walks as external lenders seemed to be brought in for both of those and I suspect we might struggle to get anything back from those...
By the way, what ever happened to the £0.75m which was raised for THC through Seeders?
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Post by jonathan24 on Mar 4, 2021 19:10:40 GMT
I'm not sure if some of the FAQs on THC website have been updated or if I just didn't read them before:
I assume we aren't creditors and so don't need to contact the administrator, as we would fall into the categories of investors? Or is it sensible to contact the administrator anyway?
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Greenwood2
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Post by Greenwood2 on Mar 4, 2021 20:18:45 GMT
I'm not sure if some of the FAQs on THC website have been updated or if I just didn't read them before: I assume we aren't creditors and so don't need to contact the administrator, as we would fall into the categories of investors? Or is it sensible to contact the administrator anyway? For other platforms in administration it has seemed sensible to register as a creditor in case the platform has been derelict in their duty and owes you money for current or later shortfalls in payments. I'm sure someone who knows more than me will be along.
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cmburns
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Post by cmburns on Mar 5, 2021 0:03:54 GMT
Hi All, Does anybody who (semi) understands these things, know what the implications are in terms of the statements on administration?. According to the email sent to investors, which differs slightly from the statement on the THC website, House Crowd Developments (HCD) is not in administration, and The House Crowd Property (“HCP”) special investment vehicles are also not in administration and "will continue to operate as normal". What does this mean with respect to The House Crowd Limited (“THC”) and THC’s wholly owned subsidiaries House Crowd Finance Limited, House Crowd Finance (Security Agent) and House Crowd Property Management Limited being placed into administration? Do the administrators have control over HCD and HCP investments, or not, because they are not in administration?Presumably with their Auto-invest products (which I have invested in), it's hard to say what's happening without knowing where funds were invested? (past stats to end of 2019 indicated approx. 60% in developments and 40% in loans) It's complicated, and I'm not sure if anyone except FF and SN probably understands the relationship between all THC companies... although the administrators will in due course too...
However in regard to the HCPs, no, the Administrators do not have formal control of these companies. They do have control over House Crowd Property Management Limited, but HCPML only holds 1 Class A share in each HCP. This 1 share is just one out of all the shares in each HCP, and it doesn't have special voting rights. (So one voice and one vote among all the other shareholders.) FF is also still the Director of the HCP companies too and as such still has a responsibility to act in the best interests of the shareholders.
The function that HCPML performed for the HCPs was coordinating the day-to-day admin. of these companies (a bit like acting as a landlord in a BTL) and managing the admin and correspondence with shareholders like you and I. For performing this function HCPML received 25% of the profits from rental income and the prospect of 25% of any capital gain when the property is sold.
Given that the Administrators are going to assume the duties of HCPML (which is now formally in Administration) this presumably means that they will also take on this day-to-day admin role too, at least initially. It's also worth saying that in some cases the actual onsite management of the HCP properties was being done by separate local (non HC) property management companies too. (Think in terms of a property owner employing a letting agency to manage tenants, collect rent, do minor repairs etc.) You can see whether this was the case or not with your HCPs by looking at the accounts.
So what I am expecting the Administrators to do is to come up with a proposal for the HCPs as to how the function which was being performed by HCPML is now going to be performed. FF should also provide some input too because he is still the Director, even if just to say he agrees with whatever the Administrator's proposals are. Whatever they come up with, it is still going to be up to the shareholders in each HCP as to whether they accept what is being proposed. Or at least it should be.
I hope this makes some sense. I am sorry I can't speak for the HCDs, I am not invested and don't know anything about them. Likewise I don't know how the Auto-Invest products were structured, though unfortunately anything where funds have been applied to mutiple projects is going to be a bit more challenging to resolve, because it's going to require the these underlying projects to be resolved first.
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cmburns
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Post by cmburns on Mar 5, 2021 1:00:25 GMT
I'm also an investor in THC, mainly in the development projects. Most of these did seem to be advancing reasonably well towards completion (albeit, still rather delayed) and so I'm hopeful that these will be allowed to progress to completion and any sales proceeds will fund the rest of the development. However, the projects I'm concerned about are The Downs and Chapel Walks as external lenders seemed to be brought in for both of those and I suspect we might struggle to get anything back from those... By the way, what ever happened to the £0.75m which was raised for THC through Seeders? I was wondering about that too. Not invested in that but I was curious. It looks as if the funds from that went to The House Crowd Limited in exchange for B or C class shares. (If someone knows better please correct me.) If you look at the Seedrs website you can still see what they were proposing to do with the money: mostly marketing and development of the Money Mog brand (remember that?) so not backed by any kind of security unlike the HCPs, HCDs. Sadly for investors I would guess that this is the most at risk capital, probably by far.
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