This announcement contains important information. As an FCA-regulated trading exchange and to ensure that all clients have the time to review this announcement, as usual, we have paused trading on the Resale Market for 3 working days.
Trading will resume at 11am on Tuesday, 20 December 2022.
We are excited to announce a programme of significant direct investment of £2.4m in the Resale Market from our parent company, Better.
A founding principle of Property Partner is to deliver genuine liquidity to an otherwise illiquid asset class. The Resale Market is the beating heart of Property Partner – Better’s direct investment will lead to increased liquidity, encouraging efficient pricing and asset valuation across the portfolio.
Better’s direct investment will take 2 forms:
- Bidding to acquire 1% per month of all properties trading on the Resale Market
- Investing in 5-year anniversary ‘blocklistings’ (where only a minority have voted to sell)
This investment will commence on 1 February 2023 and continue for 3 months. In all circumstances, Better’s investment in any property will be limited to a cumulative, maximum stake of 10%.
Better and Property Partner believe deeply in the income and capital returns available on the platform – this is a temporary program to seed the market with increased liquidity, thereby supporting buyers and sellers looking to trade. We are hugely ambitious for what the exchange can and needs to be in 2023.
To ensure transparency and fairness in our approach, we have agreed a strict investment policy with Better which is designed to encourage efficient pricing across the entire portfolio and avoid market price disturbance, please see below.
This direct investment by Better, alongside our clients, is a significant and positive development for our platform. We believe it will significantly improve liquidity and reduce sales of properties during their 5-year anniversary process where only a minority of investors have chosen to sell their shares.
Bidding to acquire 1% per month of all properties trading on the Resale Market
- No discretion over property selection: Better will bid to acquire the same proportion of all properties trading each month; this will be a maximum stake of 1% of each property per month
- No discretion over prices offered: in order to minimise price disturbance on all properties, Better will place bids alongside all other clients; these bids will start 1 penny (£0.01) above the highest pre-existing bids (of comparable volume) on each property and move up over the course of the month toward the sell offer(s); all bids are matched on a first-come, first-served basis, and Better’s bids will, of course, receive no preference of any kind over clients’ bids
- Maximum price limits: to ensure that Better’s investments do not artificially inflate pricing on the Resale Market, Better’s bids to acquire shares will not exceed the higher of the (a) latest independent surveyor’s valuation (Investment Value) and (b) 30-day weighted average share price, for each respective property
- All clients will be able to invest alongside Better: for many years, we have created portfolios for clients through our Investment Plans; until now, we have only offered “Income” or “Capital Discount” portfolios; from 1 February 2023, we will add a third Investment Plan offering, the “Market” portfolio; each month, the creation of these portfolios for clients, will be generated in exactly the same way and at exactly the same share prices, as the portfolio that Better acquires
Investing in 5-year anniversary ‘blocklistings’
We continue to receive significant client feedback on the rolling program of 5-year anniversary processes, in particular with regards to the ongoing disposal of properties for which only small minorities have voted to sell.
- Only invest alongside a majority of shareholders: where less than 50% have voted to sell
- Only invest the minimum required: all clients will have first rights to invest in the blocklistings; Better will invest toward the end of the 2-week blocklisting and only the minimum required to successfully fund
For all forms of investment, Better will be subject to the following:
- Investment limited to 10% stake: Better will limit its shareholding in any property to 10% in total
- No participation in shareholder votes: Better will abstain from 5-year anniversary process votes and all other shareholder votes; in all other respects, Better’s shares will be equal to those of clients
- Investing entity: Better will make the investments through LHE Holdings Limited, London House Exchange’s parent company, which is also a wholly owned subsidiary of Better
- Better does not have plans to sell the shares acquired: if this changes, any selling activity will be announced to all clients in advance