{"id":9787,"date":"2019-07-15T11:00:43","date_gmt":"2019-07-15T10:00:43","guid":{"rendered":"https:\/\/www.propertypartner.co\/blog\/?p=9787"},"modified":"2020-10-09T15:38:33","modified_gmt":"2020-10-09T14:38:33","slug":"ceo-update-july-2019","status":"publish","type":"post","link":"https:\/\/www.londonhouseexchange.com\/blog\/ceo-update-july-2019\/","title":{"rendered":"CEO update: 15 July 2019"},"content":{"rendered":"\n<p><em>This message\ncontains important information, including changes to Property Partner\u2019s fee\nstructure.&nbsp; As a regulated trading\nexchange and to ensure all clients have the time to review these announcements,\nwe have paused trading on the Resale Market until Thursday, 11am 18 July 2019.<\/em><\/p>\n\n\n\n<p><strong>At Property Partner, we have built the UK\u2019s\nleading online property investment platform.&nbsp;\nBelow are our plans to make Property Partner even stronger for the\nfuture and better able to deliver returns for our clients.<\/strong><\/p>\n\n\n\n<p>The Board of Property Partner has recently appointed me as CEO,\ntaking over from Marshall King.&nbsp; Over the\nlast 15 months, Marshall has done an outstanding job developing the business\nand the Board is delighted to retain Marshall as a non-executive director.&nbsp; Having been a shareholder of Property Partner\nsince inception in 2014 and CFO since April 2016, I am extremely excited to\nlead the company in the period ahead.<\/p>\n\n\n\n<p>Now in our 5<sup>th<\/sup> year, we have a client base of 10,000 active\ninvestors; a \u00a3144m property portfolio; an industry-leading technology platform\nthat offers clients seamless investment, diversification and portfolio\nmanagement; the UK\u2019s only crowdfunding platform with an FCA-regulated Resale Market,\non which \u00a334m of shares has been traded.<\/p>\n\n\n\n<p>Since the EU referendum in June 2016, we have tripled the size of\nour property portfolio.&nbsp; But the current environment\npresents significant challenges.&nbsp; The\nconditions for investment have tightened continuously, sustained by\nunprecedented levels of political and economic uncertainty.<\/p>\n\n\n\n<p>As a company, we have made important changes to strengthen our business model.&nbsp; We have extended our offering to student accommodation and development loans, and reduced the cost base of the company.&nbsp; But further changes are required to make the business more durable and drive returns for our clients.<\/p>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><strong>Introduction of an Assets Under Management (AUM) fee<\/strong><\/p>\n\n\n\n<p>As\nour business has matured, our \u00a3144m property portfolio has naturally come to\ndwarf the value of our New Listing activity in any given period.&nbsp; Until now, our revenue has been sourced almost\nentirely from upfront fees on New Listings, so we need to re-balance our fee\nstructure to reflect the relative scale of the property portfolio.<\/p>\n\n\n\n<p>From\n5 August 2019, we will charge an AUM fee based on the equity value of each\nproperty\u2019s latest independent valuation (\u201cequity value\u201d refers to that part of\nthe property\u2019s value that is owned by clients i.e. does not include the\nmortgage).&nbsp; The AUM fee will amount to\n1.2% per annum on portfolios valued up to \u00a325,000 and 0.7% on the portion of\nportfolios valued over \u00a325,000.&nbsp; The AUM\nfee will be applied to each property SPV, reducing monthly dividend\ndistributions.&nbsp; <em>This fee only applies\nto investments in property equity, not development loans.<\/em><\/p>\n\n\n\n<p>An\nAUM fee is the most common and important fee across the asset management industry,\nand it is essential that Property Partner implement this.<\/p>\n\n\n\n<p>The\nintroduction of the AUM fee is a significant change for our clients and we are\nmaking some related changes as a result:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Any shares owned on or before 15 July 2019 that a client sells on the Resale Market before 5 February 2020, will automatically receive a rebate of the AUM fee that has been paid on those shares sold.<\/li><li>With the AUM fee in place, our direction of travel in the future is to reduce our upfront fees on New Listings.&nbsp; That process will commence immediately by reducing the combined Vendor and Sourcing Fees from 3.5% to a Sourcing Fee only of 3.0%.<\/li><\/ul>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-text-color has-background has-vivid-green-cyan-background-color no-border-radius\" href=\"https:\/\/help.propertypartner.co\/hc\/en-us\/articles\/360001993793-What-are-the-fees-paid-by-investors-\" style=\"color:#ffffff\">Read more<\/a><\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><strong>Introduction of an Account fee<\/strong><\/p>\n\n\n\n<p>A compelling feature of investing with Property Partner has always been that clients can invest relatively small amounts in an asset class that otherwise requires substantial amounts of capital.&nbsp; We are devoted to continuing to offer all clients the ability to invest as much or as little as they choose, but we need to account for the fact that there is a minimum \u201ccost to serve\u201d all clients.&nbsp; From 5 August 2019, we will charge clients an Account fee of \u00a31 per month + VAT  \u2013 deducted on the same day that dividends are distributed.&nbsp; This fee is only applicable to clients with investments or deposits on account.<\/p>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-text-color has-background has-vivid-green-cyan-background-color no-border-radius\" href=\"https:\/\/help.propertypartner.co\/hc\/en-us\/articles\/360001993793-What-are-the-fees-paid-by-investors-\" style=\"color:#ffffff\">Read more<\/a><\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><strong>Creation of property portfolio central fund<\/strong><\/p>\n\n\n\n<p>As\nthe landlords among you are aware, property management is a ceaseless\nchallenge, complete with tenant issues and unforeseeable costs.&nbsp; Until now, when a property has experienced a financial\nshortfall, Property Partner has funded the shortfall by extending a short-term,\ninterest-free loan to the SPV.<\/p>\n\n\n\n<p>The\nscale of the property portfolio now provides the opportunity to establish a\ncentral fund, allowing Property Partner to make better property management\ndecisions, utilising the power of the whole portfolio for all investors.<\/p>\n\n\n\n<p>All\nproperty SPVs will contribute 1% of their purchase price to a ring-fenced\ncentral fund.&nbsp; When an individual\nproperty experiences a shortfall, this will be covered by the central fund\nextending a short-term, interest-free loan to the SPV.&nbsp; <\/p>\n\n\n\n<p>To\nensure that \u201cstrong\u201d properties are not subsidising properties with management\nissues, we will then reduce the dividend of the borrowing SPV to create the\nsurplus required to repay the loan over a reasonable period e.g. 6-12\nmonths.&nbsp; This is consistent with our\nexisting, quarterly review of all property dividend yields, resulting in adjustments\nwhere necessary.<\/p>\n\n\n\n<p>The\ncentral fund benefits investors, as long-term property management decisions should\nnot be determined solely by the immediate availability of cash within a single\nproperty SPV.&nbsp; And it avoids the severe\nvolatility that would result if we were to suspend dividends every time an\nunexpected bill was received.<\/p>\n\n\n\n<p>The\ncentral fund will be used to pay sales agents\u2019 fees when properties are sold (a\ncost previously borne by individual SPVs), so that each property SPV ultimately\nrecovers the value of its original 1% contribution.<\/p>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-text-color has-background has-vivid-green-cyan-background-color no-border-radius\" href=\"https:\/\/help.propertypartner.co\/hc\/en-us\/articles\/360026437214-Updates-to-Investment-Documents-Effective-5-August-2019\" style=\"color:#ffffff\">Read more<\/a><\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>These changes will make Property Partner a significantly stronger\nbusiness, that is better able to deliver returns for our clients.<\/p>\n\n\n\n<p>I welcome any feedback you may have, and I look forward to\ndiscussing our business plans and these changes with as many of you as possible\nin the coming weeks and months.<\/p>\n\n\n\n<p>Warren Bath<\/p>\n\n\n\n<p><strong>CEO<\/strong><\/p>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>We also have two further announcements today. Please use the links below to find out more:<\/p>\n\n\n\n<p><a href=\"https:\/\/www.propertypartner.co\/blog\/dividend-adjustments-july-2019\/\">Quarterly dividend adjustments<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/help.propertypartner.co\/hc\/en-us\/articles\/360001997454-Additional-Resale-Market-information\">Resale Market rebate adjustments<\/a><\/p>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-text-color has-background has-vivid-green-cyan-background-color no-border-radius\" href=\"https:\/\/www.propertypartner.co\/s#\/featured-view\" style=\"color:#ffffff\">View investment opportunities<\/a><\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><strong>Capital at risk.<\/strong> 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 <a rel=\"noreferrer noopener\" href=\"https:\/\/help.propertypartner.co\/hc\/en-us\/articles\/360004054894-Key-Risks\" target=\"_blank\">Key Risks<\/a> for further information.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This message contains important information, including changes to Property Partner\u2019s fee structure.&nbsp; As a regulated trading exchange and to ensure all clients have the time to review these announcements, we have paused trading on the Resale Market until Thursday, 11am 18 July 2019. At Property Partner, we have built the UK\u2019s leading online property investment [&hellip;]<\/p>\n","protected":false},"author":31,"featured_media":6358,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9787","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/posts\/9787","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/users\/31"}],"replies":[{"embeddable":true,"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/comments?post=9787"}],"version-history":[{"count":19,"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/posts\/9787\/revisions"}],"predecessor-version":[{"id":10738,"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/posts\/9787\/revisions\/10738"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/media\/6358"}],"wp:attachment":[{"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/media?parent=9787"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/categories?post=9787"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.londonhouseexchange.com\/blog\/wp-json\/wp\/v2\/tags?post=9787"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}