Assetz closed to retail investment

This comes on the back of the previous months’ notice limiting Lender withdrawals. It is very sad for the industry and from what I have read online and heard directly, it has unsurprisingly not been well received by their retail lender base. I am sure it was not an easy decision to make, but have always felt that the LandBay way of closing to retail, where they sold the loan book enabling lenders funds to be returned in one hit, rather than a prolonged run off, would have made for a more palatable decision all round.

The paragraph beginning: "Unfortunately, it is not possible for us to continue to operate" now appears TWICE

The paragraph beginning: "We were originally founded to support retail access to fair returns" now appears TWICE

Questions on the Lender Fee:

(Last updated 22nd March 2023)

What is the Lender Fee?

During this period of run off, we have taken the decision that we must now apply a Lender Fee, permitted in the Terms and Conditions of the platform. The rate that is to apply initially, and is expected to apply in the future is as follows:

Through to end of June December 2023 - 2.9% pa of performing loans

July to December 2023 - 1.4% pa of performing loans
January 2024 onward - 0.9% pa of performing loans

(This equates to an average fee level of 2.15% for the first 12 months and a 5 year effective fee of 1.15% pa)

How did Assetz Capital arrive at the percentages and front loading of the Lender Fee?

The derivation of the fee quantum and calculations used are commercially sensitive and, as such, will not be made public.

That said, if the Assetz Capital Board had not been able to demonstrate a viable financial model for the run off of the Retail Loan Book they would have been obliged, under FCA regulations, to trigger the Wind Down plan which would involve the inclusion of 3rd parties and additional costs as well as the potential cessation of funding of inflight Development Loans. This was something that we feel would have had greater detriment to Investors.

New loan origination income, previously used to subsidise the costs of the operation of the Retail Platform stopped fully on 15/12/2022, but operational overhead has continued at historic levels and will do so in the short term during H1 2023. This is due to the costs of consultations, reviews of the business model, restructuring and staff and 3rd party provider contractual notice periods.

The income needed to maintain the Retail Run Off needs to be front loaded, hence the lender Fee being higher initially and tapering over time. This is because income produced by the loan book will diminish over time, as loans repay, but sufficient funds need to be available to cover the expected run off period.

The Lender Fee expected to be generated over the first year is less than previously derived from new loan origination fees but equally, there are expected to be reduced costs. We expect the Lender Fee generated to be sufficient to safely support the operation of the Retail Platform, on its lower cost basis, and in the absence of loan origination income.