Hi all
Thanks for the queries and for those that have provided responses and suggestions.
Kaya - we have on our development schedule an update that will provide more data on the valuations over time. We do add messages to the system as we go along but appreciate it can be improved. As with any development, this takes some time but please rest assured that we are on it and appreciate your feedback.
I have provided some more details on the properties that have reached the end of the terms below.
Just to flag that we use third party data in the projections including an independent valuation at the start and RICS area projections. This gives a projected return but we really cannot predict what the market will do and have to rely on this third party data and share it with you as part of the listing. As an example, a tenant may be in situ and we receive a valuation at the end of the term based on the current condition with an increased valuation with some renovation work. We cannot do the renovation work as there is a tenant in place but those investors in the deal have the right to vote to leave, despite the reduced valuation. In that situation (which we have seen as outlined below) many investors choose to remain in the property to allow the investment to mature rather than leaving but we provide the option of liquidity in any event.
I think you would be surprised at the level of validation that we go through with our compliance team before any statement can be made. For example, as part of our Easter offer (on it's way...) we have to provide evidence of the retail price of a bar of chocolate... We try our best to provide the best estimates and projections but this is always based on data and validated.
I think what the process has shown is that the effort we go in "projecting" returns is, perhaps, wasted and unhelpful for some. As such, we are looking at better ways to display initial listings such as simply displaying the previous 3 years HPI index for the area and the projected rental yield. Any feedback here would be greatly received.
Neil - if the share price was below the original share price then the 15% was not charged as that is only charged on any capital gains. This is the case on all investments, and is highlighted in our Knowledge Centre.
I'll just re-cap on the process which may help give further clarity to everyone:
All properties are independently valued before we acquire the property and this value is used in the calculations on initial listings (together with a growth projection for the area from RICS). Then, on an exit, we instruct another set of independent valuations which gives a sales price for the property. It is then up to the investors to choose if the property should be sold or retained for a further year (and if sold whether this is on the open market or back on the platform at 95% of the valuation). To date, only SPV 1 has been sold on the open market with all other properties seeing the majority of investors choose to retain their shares. To provide liquidity to those that voted to sell, there was a relisting to allow their shares to be sold and new investors to come in at the relevant valuation at that time.
SPV 2 was slightly different as it was our first re-cycle so there was an actual capital event with a re-investment in a new SPV. We realised that this was not ideal from an individual tax perspective so, from SPV 3 onwards, we changed the process so that those shareholders remaining in the deal did not see a capital event (gain or loss) but simple remained invested with the costs of insurance for the next term being raised by the crowd as part of the re-listing.
It is worth noting that the original fund raise includes insurance, renovation costs, legal costs, SDLT, provision funds for maintenance, fees etc. As property is a medium to long-term investment strategy, having shorter terms may not give enough time for the property to cover these costs and become amortized - especially if the market is stagnant or there is a local downward movement as we have seen in some areas. We have seen this in some of our initial properties, especially where there has been a renovation at the beginning and a 2 year term. I believe that is why the majority of our initial investors chose to remain in the properties to give the opportunity for the assets to mature.
Please note that for the majority of listings moving forward the initial term has increased to 3 years.
We have some blogs and guides here (which are linked in each exit vote page, and have been circulated by email a couple of times):
propertymoose.co.uk/blog/property-moose-exit-votes/propertymoose.co.uk/blog/property-exit-options/Here's the details of all exit events and relisting to date:
SPV 1 Initial purchase price of £48,000 with a total fund amount of £63,000. The initial RICS valuation was £65,000.
At the end of the term the property was sold for £67,000.
Those wishing to exit received a share price of £531.74 and a total return of £570.06 over 2 years.
This means that over the two year term, investors will have earned a total net return of 14.01%.
SPV 2Initial purchase price of £55,000 with a total fund amount of £69,500. The initial RICS valuation was £70,000.
Valuation at the end of the term was £75,000 in its current condition but with a 4-week achievable valuation of £65,000 which was used as the option to sell to the crowd (as it would be quicker than 4 weeks).
Vote
Exit: 23.08%
Retain: 76.92%
Those wishing to exit received a share price of £467.62 and a total return of £518.67 over 2 years.
Investors that wished to exit were exited via the re-listing SPV. Returns have been distributed. Investors wishing to retain their shares, have been invested into PM SPV RL 2 Ltd.
SPV 3
Initial purchase price of £47,000 with a total fund amount of £50,500. The initial RICS valuation was £60,000.
Valuation at the end of the term was £45,000 in its current condition, or £55,000 after a small renovation (estimated to be £1,600). This particular property had competition on the market with other properties at the time of the valuation.
Vote
Exit: 5.94%
Retain: 94.06%
Those wishing to exit received a share price of £423.27 and a total return of £481.95 over 2 years (based on the valuation without the renovation as the SPV had no cash to complete the renovation at that time).
Those wishing to exit have had their shares listed on the platform, and will see their funds distributed soon. Investors wishing to stay will see their investment continue to operate as normal.
SPV 4Initial purchase price of £65,000 with a total fund amount of £70,000. The initial RICS valuation was £88,000.
Valuation at the end of the term was £70,000 in its current condition. We believe that this valuation is very low and explained this to the investors. The property delivers a gross rental return of over 10%.
Vote
Exit: 14.29%
Retain: 85.71%
Those wishing to exit received a share price of £475 and a total return of £540.02 over 2 years.
Those wishing to exit have had their shares listed on the platform, and will see their funds distributed soon. Investors wishing to stay will see their investment continue to operate as normal.
SPV 5Initial purchase price of £48,000 with a total fund amount of £51,500. The initial RICS valuation was £60,000.
Valuation at the end of the term was £45,000 in its current condition, but £60,000 after modernization (estimated at £5,000). The lower valuation was used as the current value as the renovation to maximise value could not be completed before an exit as there was no cash.
Vote
Exit: 25.24%
Retain: 74.76%
Those wishing to exit received a share price of £456.31 and a total return of £509.41 over 2 years.
Those investors that wish to exit were exited on the SM at the prices indicated on the voting page. This is currently being processed and funds will be distributed shortly for those that wished to exit. Investors that wished to retain their shares have done so.
SPV 7Initial purchase price of £42,500 with a total fund amount of £46,000. The initial RICS valuation was £50,000.
Valuation at the end of the term was £37,950 in its current condition, but £60,000 after refurb costs due to the tenant living in the property for over 12 years. The tenant remains in the property so no work can be completed so the valuation without the refurb benefit is used for exiting investors. Before any final sale, funds would be raised to complete the renovation to maximise value but the tenant is longstanding and pays the rent so it would not seem sensible to evict him and take the risk on voids.
Vote
Exit: 40.22% (1 shareholder held 32.6%)
Retain: 59.78%
Those wishing to exit received a share price of £499.46 and a total return of £532.99 over 2 years.
Those wishing to exit have had their shares listed on the platform, and will see their funds distributed soon. Investors wishing to stay will see their investment continue to operate as normal.
SPV 8The votes for this unit close this evening and so haven’t been counted yet, but the returns information is below:
Initial purchase price of £57,000 with a total fund amount of £61,000. The initial RICS valuation was £70,000.
Valuation at the end of the term was £66,000 in its current condition.
Those wishing to exit will receive a share price of c.£513.93 and a total return of c.£563.21 over 2 years (12.6% net).
This will be processed on the platform soon.
LittleOldLady - the message you have kindly pasted relates to a loan that was made to the SPV by Property Moose to cover some maintenance costs (at zero interest rate). This was included in the messages and information provided to the investors in that SPV. Despite that property making strong returns, the loan that was outstanding at the end of the term was waived at a cost to us as a business as a gesture of good will.
You chose to exit the investment at the share price of £475 and your shares were re-listed for new investors via a new listing (with an updated valuation included) -
propertymoose.co.uk/app/property/122. This is currently being processed and funds will be distributed shortly; you will be notified when this has been done.
As explained during the voting process, once the re-listing has been processed, all shareholders will sit within the same SPV listing and the valuation will be updated. The initial SPV (with the original share valuation) is not listed on the secondary market and will not be re-listed until the updated information have been included - we are unable to do this until the exit is processed - especially as the shares were subdividing from £500 to £10.
Summary
There are definitely improvements to be made to the way we display past data and we are going to work on this. Likewise, we are going to look at the initial listing projections to see if it is better to not try and assist by giving a projection based on third party data, rather just refer to HPI performance previously.
We have, and continue, to market the investments as a medium to long term investment and believe that each of our investments will perform well as BTLs. The idea of having shorter terms and the option to vote to stay or leave at the end is designed to give liquidity to investors in case they need it. History shows that property outperforms most asset classes over time but it is not necessarily a great investment for shorter terms as the asset can't mature.
We have nearly 100 BTL properties funded to date and, of these, some have not performed as we have hoped (and some have out-performed expectations). Over the least 3 years (and through the exits) we have learned and continued to refine our processes and listen to ways we can improve. I hope that we are getting there and many of our earlier investors are extremely supportive and positive about us as they can see the changes and effort we go to. Of course, we can and will continue to improve the products on offer.
The overall portfolio is delivering a net yield of around 5% (including empty properties in the calculation) and, once fully tenanted, this will be around 6%. This is net and out-performs the average
gross rental returns of the BTL market in general at around 4.6%. Please also bear in mind that all properties (bar two) are unleveraged so don't have the benefit of a mortgage (or risk).
This was a long message so thanks for bearing with me! As always, I (and the whole team) continue to be on hand to answer any questions. We are not in this to make a quick buck (trust me!) but want to build a sustainable model that delivers medium to long-term property investments to everyone.
Kind regards
Andrew
