As the financial and real estate markets continue to experience upheaval due to the COVID-19 pandemic, we understand that some GROUNDFLOOR investors may become more concerned than usual with the status of their investments.
We recently published an extensive stress test analysis of our entire outstanding portfolio to understand what potential effects a coronavirus-related recession could have on our investors’ portfolios. While this analysis is useful to help inform our customers about how GROUNDFLOOR investments could respond to changing market conditions, we also feel it is important to share how our loans are actually performing in real time.
To that end, as part of our continued efforts to be highly accountable to our investors and provide ongoing transparency, we are pleased to begin publishing weekly updates of loan repayments and asset management activities. This first post offers an orientation, along with data for the week of May 10th through May 16th.
Introducing Dave Wilson, Director of Asset Management
Before we begin, I wanted to take a moment to introduce myself. My name is Dave Wilson, and I am the new Director of Asset Management at GROUNDFLOOR. I recently joined the team at the beginning of March, and I have already hit the ground running as we adjust to a new financial normal during the pandemic.
As a seasoned veteran, I bring more than 25 years of real estate experience, asset resolution, and loan workouts to the table. Prior to joining GROUNDFLOOR, I was with Marcus & Millichap's Special Assets Services (SAS) team, focusing on the disposition of distressed assets for institutional and private investors alike. I have also worked with Grubb & Ellis as Vice President of Capital Markets, and my most recent posting was with CoreLogic as Senior Director of Sales and Marketing for the Property Data Solutions (PDS) team. I attended Tuskegee University, received a B.A. in Administration from Oglethorpe University, and earned an MBA from Pepperdine University. I am also a graduate of UCLA's Real Estate Investment Program.
I am excited to begin this new weekly updates initiative for our investors. I hope this provides useful information and insight into the status of repayments and repaid loan performance. Now, let's dive into the data.
Principal and Interest Repaid Over The Past Four Weeks
Each week, we'll lead off with a snapshot of the principal and interest repayments disbursed to investors over the past four weeks:
During the week of 4/19/20, repaid principal amounted to $203,020 and repaid interest totaled $11,073. The following week of 4/26/20, principal repayments totaled $651,230, while interest repayments reached $34,497. Two weeks ago (the week of 5/3/20), repaid principal jumped up to $882,910, with repaid interest totaling $65,342. Finally, last week (the week of 5/10/20), total principal repaid amounted to $586,380, and total interest repaid totaled $45,272.
Aggregated Performance Metrics
Next, let's take a deeper dive into repayment activity over the past weeks to get a better picture of how our recently repaid loans have been performing. This table presents a comparison of the metrics of loans repaid within the last four weeks, loans repaid since the start of Q2 (which also coincides with the general onset of economic impacts in the U.S. of the COVID-19 pandemic), and loans repaid year to date.
It’s important to underscore that this table showcases the performance of loans that were repaid during the delineated periods, not the performance of loans originated during these timeframes.
Last Week’s Repayments (May 10-16, 2020)
This table presents loans that were repaid within the previous week (Sunday-Saturday) with details on the status, actual vs. expected term, actual vs. expected rate, and the exit valuation (sales price or appraised value at time of refinancing):
* NOTE: Actual rate is not inclusive of any promotions. Individual repayments are dependent on how long your principal is active in a given loan. Please refer to our blog post on calculating interest earned for more information.
Key to Loan Status column:
Current - loan remained current throughout the term and repaid with full principal (plus interest)
Default - loan was resolved while in default
Workout - a workout plan was put into effect and the loan was resolved under the terms of the workout agreement
REO - GROUNDFLOOR assumed title to the property (either through foreclosure or deed in lieu) and sold the property.
Special Situations Repaid Last Week
Next, we'll provide a weekly overview of special situation loans we resolved in the prior week.
Last week, a total of four loans were repaid. Three of these loans proceeded according to schedule, repaying on time and in full with the contract interest rate. Only one was a special situation loan. It was resolved under the terms of a workout agreement, the details of which are below.
664 Indigo Lane - Repaid Under Workout Agreement
During the loan term, our asset management team became concerned that the borrower was not making sufficient progress on the property. Based on our review of the property, market, and borrower, we proceeded according to our standard operating procedure and engaged in workout discussions while commencing foreclosure proceedings in parallel. A workout agreement was reached to avoid a declaration of Default, and the borrower successfully completed a sale of the property, resulting in full repayment of principal (plus interest and penalties) to our investors.
Special Situations Activity This Week
Finally, each week we will provide an update of our asset management team's work on outstanding special situation loans. As a reminder, all loans are proactively monitored throughout their lifecycle, and performing loans are monitored for repayment status starting at 120 days prior to maturity. Loans can enter special situation handling upon workout or default.
The team moved forward with the following special situation loans last week.
- 3780 Glendale Milford Road
- 6192 Ridge Road
- 2378 Springdale Circle SW
- 2110 M Street
- 6218 Arthur Durham Drive
- 158 Highland Avenue
- 1388 Epworth Street SW
- 760 Terry Street (Two Loans: #1 for Initial Financing and #2 for First Draw)
We did not commence foreclosure actions on any loans this week.
Real Estate Owned (REO) Activity:
We did not take possession of any new properties this week.
This week, we went under contract to sell the following properties:
We did not sell any real estate owned properties this week.
We hope the above discussion gives you a snapshot of the work our team does each week to manage our loan portfolio and move forward on repayments. Going forward, we will be publishing this at the beginning of each week to help you get a clearer understanding of how our loans are performing and what we are doing to safeguard your investments. As always, we welcome your questions and comments. Feel free to leave them below, or reach out to us directly at firstname.lastname@example.org. We always enjoy hearing from you.