Security over the property

Your capital is secured against commercial property. Retail, offices, Industrial, leisure and some residential.

For each loan the lender group formed through the auction process benefits from a mortgage over the borrowers asset. For senior loans this is the first charge and for mezzanine loans this is the second charge.

Security over rents

We take security where applicable over the rental income and ensure that as rents are collected. Your interest is paid first before any balance is passed to the borrower.

Loan Origination

Evaluation and Origination of each loan is carried out by our highly experienced property lending team of professionals formerly with Rothschild Banking Group and headed by Peter Johns our Head of Lending (Peter was former Head of Banking with Rothschild).

Our property lending team thoroughly check each property, the market and the borrower and report on 9 key criteria of which the two most important are Loan to Value (LTV) and Interest Cover Ratio (ICR). They then produce a risk rating as a guide.

Risk Rating

Our property lending team has created a Risk Matrix based on four major categories of risk as set out in the table below.

The Lending team produces a full analysis of each tenant schedule using a software application that plots rents and interest in graphic format and uses different assumptions about void periods and re-letting to compare various projected rental income streams with the obligation to pay interest under the loan.

A property will be judged based on each of the elements in the table and given a score. Overall scores under each category are then weighted to arrive at a final score which places the property in a particular risk category from A+ (very low risk), A (low risk), B (below average risk) to C (average risk).

Risk Ratings are provided as a guide only to relative strength of a particular loan requirement as compared with other loans. These ratings do not provide an absolute measure of financial strength or the ability of a borrower to pay interest or repay the loan at the end of the term. We set out in the Risk Rating section and above, further explanation of the composition of the elements taken into account in arriving at a particular rating. These include mathematical calculations and others based on more subjective criteria such as competence of management, local market conditions and local letting market. A weighting is applied to the ‘score’ for each element.

The Relendex exchange provides a transparent process, so that prospective lenders can review details of a loan on a full disclosure basis and make their own judgment about its suitability. Prospective lenders should review all the documentation relating to a particular loan in the Virtual Data Room before bidding and where necessary should seek appropriate independent professional advice. Relendex, acting as introducer, does not accept responsibility for a loss incurred on any loan.

Following inspection and evaluation our lending team proposes a structure and Loan to Value for the loan, before issuing an indicative Term Sheet to the borrower and then finalising terms.

Due Diligence

See the separate Due Diligence page for details of the process carried out before a loan requirement is approved for posting on the Exchange and before a loan advance is made to a borrower.

Monitoring Loans

Our independent Loan Servicer Davenham Asset Management Limited then monitor the property and borrowers throughout the lifetime of the loan.

Borrowers are required to provide quarterly Compliance Certificates to confirm compliance with key loan covenants. These are scrutinised by the Loan Servicer

Borrower rents received are collected in designated Rent Collection accounts (specific to each borrower) and held at Royal Bank of Scotland International in Guernsey.

Rents received are first applied to pay interest due to Lenders.

No funds are released to the borrower from the Rent Collection Account, unless the loan is compliant and quarterly interest has been paid.

We will meet the borrower annually and review the loan.

Diversification

Diversification is managing investment risk by spreading your investment across many different loans to reduce the exposure to and the risk of a single investment. Investing in a combination of assets that are unrelated leads to returns with lower volatility and less unique risk.

Late Payments and Defaults

Rents from properties pledged as security are collected in designated Rent Collection Accounts. These accounts are monitored and controlled by our licensed fiduciary and administrator Confiance Limited, a Guernsey licensed firm. Receipt of rents will be monitored by Relendex’s lending team and loan servicer. Loan defaults will be managed by Relendex Recoveries Division. It will take advice from the lending team and other professionals and propose a course of action to achieve the best outcome for lenders. Lenders will vote to determine the course of action to be followed. Further details about the default process and voting structure are set out in the Lender Terms & Conditions and FAQ.

Back up Servicer if Relendex ceases to trade

As with investing in corporate bonds and shares, lending via Relendex is not covered by the Financial Services Compensation Scheme. If you were to invest in corporate bonds and shares, and the broker that held these investments were to cease to trade, your underlying investments would still remain safe. We have put in place similar comprehensive arrangements at Relendex. All client funds are held in a segregated Client Bank Account with Royal Bank of Scotland International in Guernsey, under the control of a licensed fiduciary. All Loan Parts will continue to be administered on lenders' behalf by a third party administrator.Register as a Lender now