Marshall King talks to AltFi about the platform’s expanded product set and explains why it fits well with Brexit uncertainty.
Marshall King, the newly appointed chief executive of Property Partner, is taking the platform in a new direction.
Continuing a process that founder and former chief executive Daniel Gandesha (pictured, right) arguably began, King now presides over a platform offering a range of property-backed investment opportunities. King is a seasoned CEO, having run a number of businesses including SaaS firm DeepCrawl and property intelligence business SearchFlow.
Property Partner is best known as the portal that allows retail investors to own a slice of equity in a residential property. Indeed, it is the leader in that sub-sector of the alternative finance market, and has raised £22.4m in venture backing to date from big-name investors like Index Ventures, Octopus Ventures and Dawn Capital.
But even before Gandesha’s departure in April, the platform had begun experimenting. Student accommodation blocks starting landing on the platform, offering investors more in the way of yield than they were used to, but with less promise of capital growth.
For its standard residential investments, investors could expect a total return, on average, of a little over 7 per cent. Half of that was made up of a monthly yield, half of capital appreciation. The newly-landed student accommodation blocks were different. They offered somewhere in the region of 5.5-6 per cent yield, with only a limited possibility of capital growth. These new investment opportunities proved popular, and formed the start of a broader strategic shift for Property Partner.
The platform soon added commercial property and assisted living property investments to its repertoire, again in the hope of giving investors access to robust income streams. Then, a few weeks ago, the platform launched its first debt-based investment: a bond paying 10 per cent per annum, for the purpose of developing apartments in Basildon.
What’s the thinking behind these moves?
“There’s times in the cycle when residential would be very attractive… and there’s times when debt would be very attractive because people don’t necessarily believe in the growth story behind residential at that time,” explained King (pictured, left).
“Different asset classes will grow or subside in volume on our platform in line with the appetite for them and in line with the property cycle that we’re in.”
He went on to say that there's a fair degree of nervousness around capital values at present, with the uncertainty surrounding Brexit a clear contributing factor. King thinks this is a big reason that yield is trumping capital growth at present. But he also admitted that he could envisage a time when debt-based deals form a larger part of Property Partner’s overall portfolio than residential investments, Brexit or no Brexit.
The platform is working with origination partners to source its loans. Proseed Capita, a specialist in bridging and development loans, provided bond number one. GAMA Property is another of its partners. GAMA’s game is to locate blocks of residential flats near transport links in commuter towns and to acquire them at a discount.
Additionally, Property Partner has recently added what it calls ‘investment plans’ – effectively an auto-investment tool – offering users a diversified exposure to portfolios focused on either income, growth, or both. It is seeing strong interest in the new tool from its investors.
King believes adding these new products broadens the appeal of Property Partner, transforming the platform into a more all-encompassing hub for property investment. He sees the strategy as a continuation of the journey that Gandesha started.
“The overriding theme is that we want to bring fantastic investment opportunities to our investors. That’s our real focus,” said King.
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.