Proplend 2021 year end round up

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2021 year end round up



Intro

“And just like that” we are staring down the barrel of not the sequel to the popular TV series Sex and the City but Omicron, the latest and potentially the most virulent strain of COVID-19 yet.



There is such a feeling of déjà vu, we had just settled down into a hybrid working pattern of Tuesday, Wednesday and Thursday in the office and Monday and Friday from home, when the Government issued their latest guidelines and we all headed home again. It’s been such a joy to see and hear in person interactions, conversation, debate, arguments and laughter return to the office, I hope that for all our sakes this is a short lived measure.



We have seen some strange events over the past 12 months but no more so than in the above mentioned TV series, (spoiler alert) when one of the characters, Mr Big, suffers a heart attack and dies whilst working out on his Peloton exercise bike. Not only did killing off one of the much loved characters in the first episode cause fan uproar, but investors caused Peloton’s share price to plummet by 11%. Peleton’s bosses were forced to issue a statement stating “that Peloton, the exercise bike brand, was not responsible for the death of a fictional character.”





P2P industry summary

2021 saw the final demise of the original big three P2P platforms, at the end of 2020 RateSetter were bought (saved) by Metro Bank, in 2021 Funding Circle still haven’t written an investor funded loan and earlier this month Zopa confirmed that they would be closing the P2P side of the business and concentrating on Zopa Bank.



But there are still plenty of good platforms operating in niche sectors who are still offering excellent rates of risk adjusted returns.



In the 2020 year-end review, I voiced my concerns over the levels of expected of defaults across both BBL and CBIL loans and I fear that these are coming true. Both the level of fraud and defaults is expected to exceed £22bn if estimates form the Office for Budget Responsibility are correct, roughly 30% of all loans actually written.



Commercial Property Market Summary

Economic, social, and digital disruptions combine to force a change in how CRE is developed, financed, and used. As we end 2021 and enter 2022, Omicron, the latest Covid variant, has tempered the short-term outlook as booster vaccinations, re-masking, and social distancing requirements have impacted commercial work and gathering facilities.



The commercial property industry is positioned at the forefront of the recovery: office employers are balancing productivity and safety; retailers face critical turning points in an evolving industry and industrial demand is through the roof catering to logistics and distribution.



BUT Reports from CBRE for Q3 2021 show the strongest capital growth for UK commercial property of any quarter since Q1 2010 and the highest All Property capital growth figure since June 2014.



Allsop’s Commercial Property Auctions, a marker we keep a close eye on, continue to show strong investor demand for commercial property. In the December Auction they sold 119 lots with a success rate of 90%, this follows the September Auction which was their largest since October 2018.



They maintain their view that “the ability of commercial property to generate income, combined with low savings rates, a market driven by cash rich investors and relatively limited supply, will continue to support prices.”



Proplend Summary

Given the underlying market and economic conditions, I am grateful that it’s been a relatively good year for Proplend. New Loan volumes were up 75% and more importantly Loan repaid volumes were up 88% from 2020 levels.



I am pleased to report that once again throughout the year, all Lenders received 100% of the interest they expected on time and in full.



Unfortunately, there are a few loans still past maturity, we appointed LPA on three of these. One resulted in a very swift repayment of the loan in full and the others have resulted in offers being received which we are working to close early in 2022.



We are engaging with borrowers earlier and earlier as to their exit strategy given that other Lenders and sales seem to be taking longer and longer to effect either a refinance or complete a sale.



AutoLend 2.0 was rolled out and has received good feedback from Lenders, the main one being removing the “12 noon cliff edge” when a loan went into funding, and we finally launched the new VAT loan product.



Whilst still a small and lean team over the year we have added new members, Tarun, Sahana and Emma on the Borrower Team, Kate W and Gabbi on the Lender and ISA side and Ven on the Tech team.



Looking forward to 2022



Firstly, that any further lockdown guidance is limited and 2022 can be as normal a year as we can hope for.



The Financial Conduct Authority (FCA) has unveiled plans to introduce a new consumer duty for all regulated firms to follow, this includes P2P platforms. The new consumer duty, to be introduced by 31 July 2022, states the following:

under the consumer duty we would expect firms to consider the likely outcomes their customers will receive, from product or service design and through their full lifecycle

we would expect firms to monitor, assess, understand and be able to evidence the outcomes their customers are receiving.

where firms identify that consumers are not receiving good outcomes, we would expect them to take appropriate action to rectify the causes

With our commitment and transparency to our Lenders, we believe that Proplend is already well advanced with the above.



Meanwhile, companies face increasing demands to prioritize environmental, social, and governance (ESG) issues, aging technology infrastructures, a tightening labour market, and increasingly differentiated competition.



How both the commercial property and P2P industry proceeds into early 2022 could set the foundation for their success over the next several years.



Loan Book Update:



We had two loans redeem this month.



Total Active Loans Commercial Mortgages Bridge & VAT Loans

70



64 6

66 paid monthly interest



60 paid monthly interest



6 paid monthly interest



4 from interest reserve



4 from interest reserve



0 from interest reserve



94% paid



93% paid



100% paid



2 loans repaid



2 loans repaid

0 loans repaid



6 loans past term



5 loans past term



1loans past term





I hope that you and your families remain safe over the holiday period and finally, I would like to wholeheartedly thank every one of our Lenders who have continued to believe in and trust Proplend through 2021 and we look forward to re-engaging in the New Year!





Best regards

The Proplend Team