Property Partner: New CEO announced, dividends slashed, fees introduced

By Oliver Smith on 16th July 2019

Property

All change at the property investment platform.

Property Partner: New CEO announced, dividends slashed, fees introduced
Image source: Property Partner.

In a surprise “CEO Update” yesterday, Property Partner announced it has appointed a new CEO just 15 months after Marshall King took over the helm from founder Daniel Gandesha.

Property Partner CFO Warren Bath announced that he has taken over from King with immediate effect, with King now being listed as a Non-executive Director on the Property Partner website.

“Over the last 15 months, Marshall has done an outstanding job developing the business and the Board is delighted to retain Marshall as a non-executive director,” wrote Bath.

In a statement King added: "we’ve made big strides in broadening our product range and making our business more efficient. The Board and I now feel it is the right time for Warren to take over as CEO and lead the business into the next chapter.”

The newly appointed Bath also revealed that Property Partner's property portfolio currently sits at £144m with 10,000 active investors and a resale market that has seen £34m worth of shares traded.

However, Bath also announced a series of changes to Property Partner’s fee structure along with a freezing of the secondary resale market until later this week when investors have had time to understand the ramifications.

“As a company, we have made important changes to strengthen our business model… but further changes are required to make the business more durable and drive returns for our clients.”

The core changes include an annual Assets Under Management (AUM) fee of between 1.2% and 0.7% depending on the size of your portfolio, and a £1 per month Account Fee.

“These changes will make Property Partner a significantly stronger business, that is better able to deliver returns for our clients,” concluded Bath.

Read what the new fee structure means for investors here.

While AUM fees and account fees are typical across the asset management industry, until now Property Partner hasn’t charged either, a boon to smaller investors on the platform.

In his letter, Bath commented that “we need to account for the fact that there is a minimum “cost to serve” all clients,” seemingly pointing the finger at these smaller retail investors.

These fees come on top of Property Partner’s existing transaction fee (2%) and sourcing fee on new listings (3.0% + VAT).

The response on social media, to what was seen by many as Property Partner "double-dipping" having added ongoing fees after already charging entry fees, was brisk:

As well as Bath’s update, Property Partner also slashed the dividend payments on 20 existing properties in its portfolio by between 0.5% and 1.25%, blaming dividends not being “aligned with the net rental profits generated by the investment”.

Property Partner was launched by Gandesha in 2014 and went on to secure over £22m in funding from some of Europe’s leading investors including Index Ventures, Dawn Capital, Seedcamp and Octopus Ventures.