Given the rather grim news that has hit the headlines over the past few weeks, you might be inclined to ask what this all means for Yielders and your investment. This post serves to give you the inside track on our view of things here at Yielders, as well as a reminder of the key fundamentals of our assets.
The truth is, nobody knows exactly when the market will right itself, however we are almost certainly going to see a significant slowdown in global economic activity over the next few months. Nerves surrounding trade, geopolitics and supply chains are prompting investors around the world to move their money around into various different asset classes in order to find a ‘safe-haven’ from difficult market conditions. The Bank of England has recently announced its commitment to shoring up the economy through a lowering of interest rates and an expansive quantitative easing package to provide some pre-emptive liquidity to the UK market. That said, only time will tell as to the effectiveness of these measures, especially seeing as things are getting quite wobbly in sectors such as fixed income and equities.
All this considered, your investment(s) with Yielders operate slightly differently to conventional stocks and shares. Their value is backed by the value of the real estate underlying them, and so are not subject to the more precipitous fluctuations seen among the more speculative asset classes as of late. Here are a few key points to keep in mind as an investor with Yielders:
- All of our assets are 100% free from debt or equity. As a registered shareholder of an asset, your claim on the property will remain yours until exit with all of the privileges granted to you as per the Articles of Association.
- Each asset is held in its own limited company structure (known as an ‘SPV’), with complete control and discretion of the asset down to the individual investors.
- Your shares are not subject to a sudden change in value. We RICS value our properties twice within an asset’s investment term, meaning that the price of your shares will only be subject to change upon a second RICS valuation which we do on exit. On the majority of our assets, we are looking at 3-5 years before this process is initiated depending on the asset.
- We grant each investor equal voting rights. This means that if you are a shareholder in an asset that is nearing exit and we cannot achieve a satisfactory sale price on your behalf, you can vote to keep the asset generating rent (subject to 75% of investors agreeing). Investors can therefore continue to receive dividend payments on the first of each month until a satisfactory price can be achieved on behalf of our investors, allowing an asset to ‘ride out’ any downturn in property prices.
With this in mind, it is important to consider that you may see a reduction in your dividend payments over the coming months. Measures mandating physical distancing have confined people to their homes, which for many means that they are unable to work – this therefore impairs their ability to pay rent significantly. The UK government has introduced measures to protect renters and landlords, including a ban on evictions and mortgage holidays for buy-to-let properties. We do not anticipate that this will be the case for the majority of our assets which fall under the category of social housing, however we wanted to prepare our investors for the prospect of a few months of potential reduced investment income due to the current situation.
Here at Yielders, aside from the fact that we have switched from our Canary Wharf offices to working at the kitchen table, nothing else has changed. We still plan to forge ahead by offering you all new and exciting investment opportunities, while providing the same level of support that you’re used to. As always, please feel free to reach out to the team with any questions by emailing us at firstname.lastname@example.org, or through the chat function on our website.
Yielders does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Investments in property and unlisted shares carry risk and you may not receive the anticipated returns and your capital may be at risk.