Interview with Michael Lynn CEO of Relendex, a peer to peer lending platform, offering asset backed loans to investos.
Can you briefly present yourself?
Michael Lynn, founder and CEO. Michael qualified as a Chartered Accountant in 1971. After qualifying he joined Deloitte in London, later moving to their Paris office. He was a Corporate Finance Executive with Charterhouse Group (now part of HSBC) and also held responsibility for a large commercial and industrial property portfolio owned by the bank, acting as a Director of a number of its European subsidiaries. Most of his career has been devoted to the Financial Services sector, where he has been a Founder, CEO or senior director of regulated businesses, including general and life insurance and pension investment.
When did Relendex Launch?
We launched in May 2013.
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.
What has been the average ROI on Relendex?
8.5%pa
Can part of the wide success of p2p lending be attributed to social media?
Yes, undoubtedly.
Did you have lenders default?
Where all investor funds recovered?
What happens to the interest rate during a default?
No defaults.
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.
What was the greatest challenge so far for Relendex and how did you solve it?
Until now the challenge has been insufficient lenders to fill auctions. We have used various marketing techniques and social media to attract more lenders.
Under what regulation regime does Relendex operate?
Relendex is regulated by the UK Financial Conduct Authority under interim permission.
Is Relendex open to international investors?
Yes
How can investors sign up? What documentation is needed?
UK Lenders will need their passport details during sign-up for us to conduct the Anti-Money Laundering/Know-Your-Customer checks. International Lenders will need to provide us with copies of their passport and proof of address.
What’s the minimum investment?
Minimum investment is £500.
What are the fees for investors?
There are no fees for investors.
What is the range of loan terms you have had on the platform?
Loans terms on Relendex typically range from 12 to 24 months.
Is there a secondary market? How does it work?
Yes we do have an automated secondary market called the Resale Marketplace where Lenders are able to buy and sell Loan Parts. Within the Lender Dashboard there is a tab called ‘My Loan Parts Portfolio’ that lists all Loan Parts belonging to a particular lender. By pressing the ‘Sell’ button, a lender can place his Loan Part(s) in the Resale Marketplace. When a buyer acquires the offered Loan Part, settlement is automatic between the two lenders’ accounts, including the apportionment of interest. This marketplace operates on a matched-bargain basis.
Is the interest paid monthly or at the end of the loan period?
Interest is paid quarterly to investors.
What is the average loan to value ratio for the loans?
Average Loan to value ratio has been 56%
Are investors lending to Relendex or directly to the borrowers?
Investors are lending directly to the borrowers.
Investors interested to learn more about Relendex and the investment oppportunities offered should visit their website:
We thank Michael Lynn for this interview.
