We\u2019re really happy to celebrate the fourth anniversary of our initial launch to investors. We\u2019ve achieved a lot in that time, and see a long and bright future for the business. We started by raising money for individual properties lying along the Crossrail route, with the idea that these properties would see strong capital growth. We were delighted to realise the sale of two of these early investments recently, netting gains of 43% and 27% to investors<\/a>.<\/p>\n As we developed our business, we were able to secure discounts on residential properties by buying in bulk. We evolved our strategy to focus on regional towns with strong commuter potential. We also introduced modest gearing to our model, giving investors leverage on their equity investment.<\/p>\n By the middle of 2017, as residential capital growth expectations waned, investors started to seek higher yield assets and we brought purpose built student accommodation assets to the platform, generating very strong demand.<\/p>\n Last year, we completed our first commercial deal, and more recently we have diversified further by offering development loans. These proved to be popular with investors looking for higher returns, and last week we launched an Innovative Finance ISA<\/a> allowing investors to maximise their returns (more about that later).<\/p>\n <\/p>\n Fast forward a few years and we have raised over \u00a3104m from investors and have \u00a3130m of assets under management in 5 distinct segments: \u201cOur returns during the year ended December 2018 were at the upper quartile measured against a basket of property REITS listed on the London Stock Market.\u201d<\/p><\/blockquote>\n <\/strong><\/h4>\n The value of the properties on our platform remained largely unchanged throughout 2018, as the rate of growth in UK property market slowed below the long-term average, in no small part due to Brexit related uncertainty. However, UK property and more specifically Property Partner property, continued to demonstrate great stability in the face of wider market uncertainty and has outperformed other more volatile assets which are more closely linked to business performance and changes in market sentiment.<\/p>\n Including dividends, our annual total return of 4% is below the longer term annual average rate of 7.3%(1)<\/sup> delivered since Property Partner launched in January 2015, but it represents significant outperformance of the UK stock market: the FTSE all share index showed a total return of -9.5%(2)<\/sup>, including the fall in share prices and dividends paid during 2018. REITs (Real Estate Investment Trust) listed on the London Stock exchange performed even worse with an average annual total return of -13%(3)<\/sup>.<\/p>\n <\/p>\n As experienced property investors, we understand that the most appropriate and attractive investment opportunities depend on the economic environment and cycle and that we need to be adaptable to source great deals.<\/p>\n In the current period of high uncertainty<\/a>, we feel that a strongly opportunistic approach has merits and we are delighted our investors have committed nearly \u00a32 million so far to our first Opportunistic Fund. This enables us to move quickly and conclude better deals with motivated sellers.<\/p>\n We have also offered investment opportunities from some 3rd party property teams to our platform for the benefit of our investors. We frequently see attractive deals being financed by institutions or ultra high net worth investors. Due to our deep connections in the property market, we are sometimes able to bring a portion of these already underwritten deals to our investors, such as our recent property, Sherborne House<\/a>. We\u2019ll continue to bring a small number of these sorts of deals forward.<\/p>\n In this time of lower property value growth expectations, we also recognise that property-backed lending has a place in the investment mix as a product with the possibility of strong returns. Given our in house expertise in assessing residential property values, we\u2019ve chosen to work initially with residential development opportunities where we\u2019re confident of the final sale values. We have partnered with a specialty originator of residential development lending called Proseed, and successfully funded two development debt opportunities with 9-10% yields. We are planning to bring many more debt opportunities to the platform.<\/p>\n <\/p>\n The Innovative Finance ISA<\/a> (IFISA) wrapper permits UK based investors to use their \u00a320k individual ISA allowance to invest in our debt based products. Investing via the IFISA enables investors to reduce their tax liability on the proceeds of the investment. It\u2019s also possible to transfer in existing ISA balances from other providers.<\/p>\n I\u2019m really excited to be able to offer IFISA accounts to our clients. Simply having this capability integrated into our platform opens the possibility for a lot more conversations about the type of service and the benefits we can offer. Watch this space.<\/p>\n Please feel free to email me at ceo@propertypartner.co<\/a> with any thoughts and I\u2019ll endeavour to respond to all messages.<\/p>\n <\/p>\n \n\nThe environment has changed radically<\/strong><\/h4>\n
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\nThe strong London-centric residential capital value growth of 2014-2016 has given way to a flat or slightly falling London residential market, with subdued capital growth expected elsewhere. We have adapted by bringing higher yield opportunities to our platform, the intention being to maintain strong overall returns to our investors.
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\nOur investment model offers investors choice and liquidity at the fractional individual property level, and thus differs radically from the other ways to access property investment, like REITs or direct investment. <\/p>\n<\/p>\n
Outlook for 2019<\/strong><\/h4>\n
The Innovative Finance ISA now available for debt deals<\/strong><\/h4>\n
\n2019 is set to be a busy year for Property Partner. We will continue to improve, for example launching a new dashboard, and bring new and exciting investment opportunities to platform. Here\u2019s to the next 4 years, and thank you for choosing Property Partner.<\/p>\nKind regards<\/h4>\n
Marshall King, CEO<\/h4>\n
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