• Latest property revaluations show a marginal reduction of 0.05% since March 2019
• Total return of 6.0% p.a. since launch
• Total return over the past 12 months is 3.5% across the portfolio
• Assets under management increased by £5.4m in the six months to 30 September, reaching £139m
• First development loan investment repaid delivering a 10% p.a. total return
The UK property market has continued to demonstrate resilience and stability, with residential prices increasing by 0.7% over a 12 month period to end July 2019 according to the Land Registry UK house price index. Overall transaction levels at a national level have begun to slow in the face of unprecedented political uncertainty, showing a decline of 3.1% to the end of August 2019 compared to the previous 12 month period. Markets have continued to diverge regionally since the EU referendum, with prices now weakening in the North East, some areas of London and the South East.
For the past three years, we have focused our investments on higher yielding areas outside of London and have bought higher yielding asset classes to the platform, such as Purpose Built Student Accommodation and development loan bonds. In Q3 2019, we completed our first holiday let investment, with the Bath and Oxford portfolio let to StayBeyond. And we acquired our first PBSA acquisition benefiting from a long lease to a university, at Ramsay Place, Aberdeen.
The quarter saw the repayment of more than £1.3m in capital and interest to investors from our first development loan investment at Regent House, Basildon, and the sale of unit 18 in Golden Hill Fort for a net capital return of 95% on equity, just 12 months after its purchase. Click here to learn more.
Latest property revaluations show a reduction of 0.05% since March 2019
Every six months, Allsop LLP, an independent, RICS-accredited surveyor, re-values the residential properties on the Property Partner platform. The PBSA properties are re-valued annually in September by independent RICS accredited surveyors.
The result was a marginal decrease of 0.05% in the value of properties in the portfolio. The residential properties in the portfolio increased in value by 0.1% since 31 March 219. The PBSA properties declined by 0.6% since the 30 September 2018 revaluation. The PBSA decline is the result of a fall in the value of Viaduct Works, Huddersfield – of the other 7 PBSA properties which were revalued, 4 increased in value and 3 remained the same.
Of the 105 properties that were revalued at 30 September 2019, 11 saw an increase compared to their previous revaluation, 71 remained unchanged and 23 experienced declines. Of the 34 properties that experienced an increase or decrease, the 11 below had meaningful changes. You can read more about the reasons for these changes on the individual property pages.
Properties that experienced meaningful increases:
- Golden Hill Fort, up 19%
- College Mews, Lincoln, up 6.8%
- Pierpoint Street, Worcester, up 5.3%
- The Warehouse, Chester, up 4.4%
Properties that experienced meaningful decreases
- Viaduct Works, Huddersfield, down -12.4%
- Woodgate Court, Hornchurch, down -11.9%
- Cotton Avenue, Acton, down -7.2%
- St James Road, Sutton, down -6.7%
- Sherringham Court, Hayes, down -6.3%
- Northfleet Lodge, Woking, down -5.0%
- Chadwick Road, Langley, down -3.6%
You can view the comparable information provided by Allsop for each of our residential property valuations here.
Latest revaluations imply a total return of 6.0% p.a. across the platform since launch
The revaluations result in an average total return of 6.0% p.a. across all properties since platform launch. This is made up of 1.7% from capital growth and 4.3% from dividend yield, denoted by the blue bars in the chart below.
Dividend and total return figures are quoted before the impact of the AUM fee introduced in August 2019.
Taking into account the full discounts achieved at purchase and each property’s current valuation at the intended method of sale, the total return increases to 9.6% (denoted by the green bars in the chart below).
The above total return* calculation can be found here (not available on mobile).
The total return over the past 12 months is 3.5%
The bars below show that the portfolio has, on average, after all fees, delivered an annual total return of 3.5% over the 12 months to 30 September 2019, including a dividend yield of 3.8% and -0.3% in capital value growth.
The graph below denotes the return profile by property category based on 12 month performance at the end of each period, corresponding with the total return of 3.5% across the platform at 30 September 2019. UK regions outperformed the capital in the last 12 months, with an income return of 4.3% compared to 2.5%, capital growth of 0.3% versus -1.9% and a total return of 4.6% against 0.6%.
PBSA delivered a total return of 2.2% in the 12 months to the end of September 2019, with an income return of 5.9% and capital growth of -3.7%. The capital growth figure was heavily impacted by the reduction in value of Viaduct Works, Huddersfield, which reflects the weakened conditions in the local market rather than the health of the wider asset class. The remainder of the PBSA portfolio excluding Viaduct Works achieved a capital growth of -1.1% and a total return of 4.8% over the period.
Average dividend yield of new properties funded in the 12 months to 30 September 2019 is 5.7%
High-yielding PBSA blocks have driven a higher average dividend yield across new properties listed on the platform. Over the last 12 months, the new properties we’ve funded have had an average dividend yield of 5.7%, compared to 4.1% across all properties since platform launch.
Assets under management increased by £5.4m in the six months to 30 September, reaching £139m
The total value of investments on the platform is £139 million with 109 separate property assets for investors to select from and 11 development loans in progress. Assets under management have increased by more than three times since the EU referendum in June 2016.
First development loan investment repaid delivering a 10% p.a. total return
We funded 9 new development loan investments on our platform during Q2 and Q3 2019, taking our total portfolio to £5.4m, providing investors with the opportunity for further choice and diversification across higher yielding investments. Our first development loan investment secured against a scheme of 106 flats at Regent House, Basildon was repaid in full with interest on 19 September, 3 months ahead of schedule, delivering investors a net total return of 10% p.a.
In January 2019, we launched our Innovative Finance ISA to enable tax free investment into these opportunities. We intend to continue to expand this part of the business in addition to our core property investment offerings, with additional property-backed debt investments scheduled for launch on platform in the coming months.
We are passionate about transparency and hope this information is helpful as you consider your investment decisions.
Please note: when you invest your capital is at risk and past performance is not a reliable indicator of future performance.
If you have any questions or comments on this article, or anything else, drop us an email on firstname.lastname@example.org – we’d love to hear from you.
* Since the launch of the platform in January 2015, properties have, after fees and corporate taxation, delivered an estimated total return of 6.0% p.a. up to 30 September 2019; including 4.3% net rental income (dividends) and 1.7% capital value growth. These returns are calculated six monthly and (i) with reference to the average dividend yields and price movements of properties with at least 3 months trading history on the Resale Market, (ii) spreading over 5 years any purchase discount to the RICS valuation, (iii) amortising property acquisition costs over 10 years, (iv) assuming the property remains tenanted, (v) assuming that investments are held for the long term, to the extent that the annualised impact of the Property Partner initial transaction fee becomes immaterial, (vi) weighting each property’s performance according to their initial funding value, and (vii) before deduction of the Property Partner AUM fee introduced on 5 August 2019.
All dividend and total return figures are quoted before the Property Partner AUM fee as the fee paid by each client varies between 1.2% p.a. and 0.2% p.a., depending on the size of the portfolio. The impact of the AUM fee on both the annual and the all time annualised performance figures presented at 30 September 2019, is small for all clients, given its recent introduction on 5 August 2019.
You can download the objective data used to calculate this estimated return here (not available on mobile). Past performance is not a reliable indicator of future performance.
To go back to the quarterly close period update click here.
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.