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Post by greatboo on Mar 3, 2023 15:42:25 GMT
I see here: help.londonhouseexchange.com/hc/en-us/articles/9613522060573that for any properties that remain on the platform after their next 5 year anniversary vote, the 5 year vote will be replaced with an annual vote process. But whereas the 5 year process offered investors a way to exit their investment at fair market value, the new one year process does not. Unless a majority of investors vote to sell, the property will remain on the platform and the only way to exit is via the secondary market - usually at a substantial loss to FMV. This is very different to what I signed up for, with much less liquidity available. Faced with this lock-in I think I'm going to be forced to exit almost all my properties at their final 5 year vote. If other people feel the same, I can see a lot of properties coming off the platform in the near future. Anyone else feel the same way? |
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IFISAcava
Member of DD Central
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Post by IFISAcava on Mar 3, 2023 15:50:21 GMT
I see here: help.londonhouseexchange.com/hc/en-us/articles/9613522060573that for any properties that remain on the platform after their next 5 year anniversary vote, the 5 year vote will be replaced with an annual vote process. But whereas the 5 year process offered investors a way to exit their investment at fair market value, the new one year process does not. Unless a majority of investors vote to sell, the property will remain on the platform and the only way to exit is via the secondary market - usually at a substantial loss to FMV. This is very different to what I signed up for, with much less liquidity available. Faced with this lock-in I think I'm going to be forced to exit almost all my properties at their final 5 year vote. If other people feel the same, I can see a lot of properties coming off the platform in the near future. Anyone else feel the same way? Well you have the option of the exchange, but that is usually at a 20%+ discount to value. Most of the properties at 5 year anniv aren't getting the resale shares bought anyway (who would buy at full value when you can get the shares discounted?) so most are getting sold from what I can see. So I am voting to sell most and then either get the fair value or it will be sold and get market value. a few I am planning to hold as the break up sales plan seems a good option - but does mean being stuck in for a few years yes.
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Post by drg on Mar 3, 2023 22:04:31 GMT
In theory, it should work out ok. It's not impossible but it should be quite unlikely that the property is attractive enough to hold that over half of shareholders want to remain owning the property, yet so unattractive to hold that it trades at a large discount in the secondary market. So (in theory) if you want to sell, you should be able to either sell for a decent price in the secondary market, or you should be successful in voting to sell. Perhaps it could be the case that the secondary market is still trading at 20%+ discounts, yet over half of shareholders hate money so much that they'd rather hang on to their property than sell it for full value and re-invest the proceeds in a similar property at a 20% discount, but hopefully not. It's worth noting that some portion of the secondary market discount is illusory in terms of sale value because as soon as the sale process comes around, the stated value drops due to subtracting all the sales costs etc.
There is also a large benefit of the new process, which is that shareholders can vote to sell properties for which there is a large premium available for selling units individually. Sometimes in the old process, the 5-year point comes around for a property where a 40% premium on the share value would be available if they sold the units individually but we have to decide between voting to sell in the block listing at the discounted investment value or voting to hold on to the property, with no option to make the obvious choice and realise the premium by selling all the units individually. This issue has largely solved itself anyway because they are selling loads of units to pay off mortgages. It was the mortgage leverage making the premiums for selling units individually so high but there will still no doubt be situations where it's clearly beneficial to want to vote for them to sell off all the units.
Overall, I understand the concern but I think it's a really good change, although not 100% risk-free for sure regarding getting locked-in.
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jester
Member of DD Central
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Post by jester on Mar 5, 2023 0:27:18 GMT
As one of many who are massively unimpressed with LHXs ability to lose value on property at every turn I've been considering exit plans and frankly I'm struggling!
As things stand I can take a substantial loss on the secondary market, attempt to sell at fair market value during the 5yr process which never seems to succeed or hope they don't flog it off too cheaply when the 5yr process fails.
Hopefully the 1yr votes will lead to some sales when values are high and not just people running for the doors when they're deflated.
In the meantime, unit sales and equity raises to patch over the mortgage cracks seem to be the order of the day!
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Post by overthehill on Mar 5, 2023 10:46:00 GMT
As one of many who are massively unimpressed with LHXs ability to lose value on property at every turn I've been considering exit plans and frankly I'm struggling! As things stand I can take a substantial loss on the secondary market, attempt to sell at fair market value during the 5yr process which never seems to succeed or hope they don't flog it off too cheaply when the 5yr process fails. Hopefully the 1yr votes will lead to some sales when values are high and not just people running for the doors when they're deflated. In the meantime, unit sales and equity raises to patch over the mortgage cracks seem to be the order of the day!
There are two types of P2P buy-out, takeover, wind-down, switch to institutional investment only. We all know which companies are which type.
One type where the business goes I couldn't give a monkey's toss about existing investors or historic treatment or poor returns, locked in cash or illiquidity. Tough luck, not our problem, our investment must take advantage of the situation and maximise short term returns. We'll ride the continuing legacy reputational brand damage like a donkey.
Then there is the other type.
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