To ensure that all clients have the opportunity to consider this announcement, as usual, the Resale Market will be suspended for 3 working days, re-opening at 11am on Wednesday 23 December 2020.
Next quarterly announcements and close periods:
31 March 2021 – market closed from 11am that day until 11am, 7 April 2021
30 June 2021 – market closed from 11am that day until 11am, 5 July 2021
- 1. Recommencing dividends on 15 properties
- 2. Resale Market update
- 3. Investment Plans
- 4. Sale of single flats within blocks
- 5. Product improvements
- 6. Update on development loans
- 7. Properties with fire safety issues
- 8. Festive season operations
Since the stamp duty holiday was announced in July, the residential property market has seen house prices rise by 5.4% in the 12 months to October. Within that national average, there are certain property types and locations that are encountering different fortunes. For example:
- Lower demand for flats as buyers seek outdoor space and place less importance on proximity to city centres
- Financial impacts of the pandemic have hit potential first time buyers harder than existing homeowners, with the former group being a large buyer of flats
- Flats in London increased in value by 1.8% in the 12 months to October, being one-third of national average house price growth of 5.4%
- Flats are taking 70 days to sell on average, while houses are taking just 29 days (according to estate agents Hamptons International)
The particular relevance of these trends to our portfolio is that those properties currently going through their 5-year anniversary processes are all London-based and mostly flats rather than houses.
The student accommodation sector remains in a state of considerable uncertainty. Following a summer of rent rebates, many students have been dissuaded from moving to, or staying in, their university city due to the severe restrictions imposed on their social and academic lives. Across our student portfolio, occupancy has continued to increase slowly since the start of the autumn term, reaching 72% of overall bedspaces.
Recommencing dividends on 15 properties
We continue with our cautious approach to restarting dividends, only declaring dividends for those properties that are in a strong financial position and where there is a high level of confidence that the dividend is sustainable in the medium term.
Below is a list of 15 properties which will recommence dividend payments from 5 January 2021; when added to the 11 properties that recommenced dividend payments on 5 October 2020, the average dividend yield on all 26 dividend paying properties is 3.3% p.a. based on latest independent valuations and 4.0% p.a. based on current Resale Market trading prices.
Prior to the crisis, all dividends were quoted before deduction of the AUM fee; we have now changed that policy, and all dividends are quoted after deduction of the AUM fee (for example, the 3.3% yield quoted above, would have been quoted pre-crisis as 4.5%).
Those clients with larger portfolios receive a rebate that reduces the net AUM fee paid on investments in excess of £25,000 from 1.2% to 0.7%, hence receiving a higher yield than those quoted below.
The following 15 properties will re-commence paying a monthly dividend from 5 January 2021:
|Property||Dividend yield p.a.(after AUM fee)|
|Flat 3, Tower Mint Apartments, Tower Hill||2.25%|
|11 Murray Court, Hanwell||2.25%|
|Sandy House, Rugby||3.25%|
|Blanchmans Road, Warlingham||3.00%|
|Agecroft Apartments, Pendlebury||3.00%|
|Woodland Way, Mitcham||2.75%|
|Whitewell Road, Frome||2.00%|
|Blackfords Court, Cannock||3.00%|
|Station Road, Sutton||2.25%|
|Heritage Court, Dinnington||2.25%|
|Ollivers Chase, Goring-by-Sea||2.00%|
|Heddle Rise, Wakefield||3.75%|
|Friars Way & Abbotsmeade Close, Newcastle||2.50%|
|Golden Hill Fort, Isle of Wight||3.00%|
|Verney Street, Exeter||4.50%|
Further discussion of the performance of the above properties can be found in that property’s Investment Case.
For the properties with dividends remaining suspended, all net rental income for each property accumulates within that property’s account, strengthening its financial position.
At the next quarterly announcement, on 31 March 2021, we will announce any further properties that are able to restart paying a dividend.
Resale Market update
Over the past quarter, PPX (the index of trading prices for all properties) has declined from 79.0 on 30 September to 74.0 today, a decline of 6%. As a result, properties on average are trading at a 25% discount to the latest independent surveyors’ valuations*.
Within that picture of the overall market, there is a tale of two markets – since 30 September 2020, the 11 properties paying dividends have increased in value by an average of 12%; the rest of the properties fell by 7% over the same period. The three properties with highest yields, Ramsay Place, Pierpoint Street and Pitt Street have traded-up by an average of over 25%.
On 30 October 2020, we launched the Income Investment Plan, providing investors with a portfolio of the 10 best performing dividend yielding properties on our platform. The plan targets a portfolio with a yield in excess of 3% p.a. (after AUM fee), but given the discounts available on the Resale Market, the Income Investment Plan is currently delivering a net dividend yield in excess of 4% p.a. (after AUM fee).
In addition to the income from this portfolio, as described above, those properties paying dividends have traded-up strongly, delivering attractive capital returns on the Resale Market.
The Capital Discount Investment Plan remains available, selecting a portfolio of 20 properties trading with the largest discounts to independent surveyors’ valuation*. The target average discount is a minimum of 20%*; based on Resale Market trading prior to this close period, the Capital Discount Investment Plan is currently delivering an average discount in excess of 30%*.
Sale of single flats within blocks, subject to shareholder votes
On 30 September 2020, we outlined a strategy of targeted disposals within the portfolio, where an SPV with multiple units would benefit from the disposal of one or more of those units (i.e. not the disposal of an entire property/block). We have implemented this strategy to work hand-in-hand with relevant units becoming vacant, to minimise void periods.
We are currently marketing 17 individual units for sale, of which 3 have received an attractive offer so far. For these 3, shareholders have either voted or are in the process of voting on whether or not the sale will proceed.
We have released a series of product improvements over the last quarter.
Given the steady stream of properties commencing their 5-year anniversary process and our strategy for selling single flats within blocks, we have provided enhanced disclosure of our historic record of selling properties here.
Our first 4 properties sold have delivered an average total return to investors of 14% p.a. We have a number of further sales in the pipeline and will add to this selling record whenever a sale completes (be it from a 5-year anniversary process or the sale of a single unit within a block).
Trading with less back-and-forth
We have significantly improved the efficiency with which you can navigate the site while trading shares. Now, whether you’re in your personal dashboard, Live Trading or Trading Data parts of the platform, there is a handy sidebar with all the relevant trading information and Buy/Sell functionality.
iPhone/iPad IOS App upgrade
Our app is available in the App Store with the latest version of iOS. Download it to get quick access to your account using Touch ID or Face ID.
5-year anniversary process dates on your current portfolio
The 5-year anniversary process is a cornerstone feature of our investment product. The date at which this comes around for each property is important for shareholders looking to exit at that time and has a significant impact on the way properties trade on the Resale Market in the months leading up to the date. The relevant dates for all properties that you have invested in are now easily seen in your Current Properties portfolio as the first column on the table.
Update on development loans
You can find the latest update on each outstanding loan on its investment page here.
Properties with fire safety issues
Updates on all properties affected by fire safety issues can be found here.
Festive season operations
Our Resale Market will continue to operate as usual over the festive period. Other operations (e.g. customer service, withdrawals, deposits) will operate with reduced service levels between 23 December and 3 January (inclusive).
If you have questions about these announcements, please email firstname.lastname@example.org.
As this exceptional year draws to a close, we thank all of our clients for their continued support. We wish you a merry Christmas and prosperous New Year in 2021.
The team at Property Partner
* RICS-certified independent valuations for all residential properties were announced on 30 March 2020. These valuations took place in the weeks before the escalation of the COVID-19 crisis, so are an historical reference to the market prior to disruption by the crisis. They do not take account of the current and expected impacts on the economy and the property market, and investors should not rely on these revaluations as a reflection of property value whilst the market is disrupted by the crisis.
Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.