Extract of an interview conducted earlier in the year with Michael Lynn CEO of Relendex.
What are the different investment propositions being offered at Relendex?
Relendex is a secure lender against commercial property. Nearly all our lending is against a first charge over the asset. Loan to Value and interest rates may vary. Period is typically between 12 and 24 months. We lend against investment property (income –producing) and residential and commercial developments.
What are the main advantages for investors in these investment propositions?
A good return and the investment is secured against independently valued real estate assets.
Are Interest rate auctions interesting for both investors and lenders, what has been the experience of both so far?
Most lender/investors prefer a fixed rate of interest. Borrowers like the certainty of a fixed quoted rate. Our rates are transparent to both parties. No hidden margins or fees.
We have not run a Dynamic Rate Auction for more than 2 years.
Where do you see Relendex in 3 years?
A large Peer to Peer lender with substantial institutional backing offering a good range of products to the wider investment community.
How can investors rest assured that Relendex’s problems of the past will not show up again?
We posted one large loan which we didn’t fill back in 2013. In retrospect, this was too ambitious as a first auction. Since then we have had no problems. Our business model is a good one and we continue to write good quality business. We have had no defaults since we started.
What are the main risks for investors?
Main risks are: The value of real estate falls or the developer does not complete the project or has substantial delays. We mitigate these risks by setting the Loan to Value at appropriate levels and in some instances take additional collateral. We impose amortisation schedules on some loans to ensure that we are not exposed at any point in the life of a loan. We often retain an interest escrow deposit to ensure that interest is paid. We take personal guarantees from borrower principals for capital and/or interest. We employ Architects and Quantity Surveyors to monitor development expenditure and control drawdowns. We employ independent qualified valuers of good standing.
What happens to the loans under management if Relendex defaults?
We have a Third Party Administration Agreement in place with a regulated firm to take over the responsibility for handling the run-off of the existing Loan Book.
What credit rating/credit history data is available on the developers/borrowers and how do you use this in your due diligence?
Most of our borrowers are Corporate. We use Equifax for individual credit checks. For Corporate borrowers who use an existing company as the borrower entity we will download Accounts from Companies House. We ask individuals and principals of Corporate borrowers for Assets and Liabilities statements, which the borrowers warrant. Anything adverse is investigated in more detail. We often ask for verified statements form accountants and lawyers acting for individuals or the principals of Corporate borrowers.
Is Relendex open to international investors?
Yes
The full interview can be read here
