In the third of our case studies looking at specific instances of our recovery process in action, we outline the steps taken in recovering a defaulted project in Germany.
Even thought the loan defaulted, we were able to, recover it with 3,7 months, Bring back €0,49M principal return, and 5,89% in earnings.
One of the things we pride ourselves on is the efficacy of our recovery process, which is borne out by the figures. From more than €28M of recovered defaulted loans, the average return of fully recovered loans stands at 8.72% and the average term from default to fully recovered status has been 12.6 months. (N.B. These numbers are dynamic and subject to change as we recover more loans. They are accurate at the time of publication. For completely up-to-date numbers, please check the statistics page).
As we get many questions about defaulted loans, we’d like to share some information about the nature and extent of the work we do in this regard. Hopefully, this will give you some peace of mind, should you have other defaults in your portfolio currently or in the future, and help you to trust that we have the team, the plan, and the strategy in place to protect all your investments.
Today we’ll be discussing the following recovered loan.
#1698 Development loan (Germany) – 1 – 5 stages.
Amount recovered: €500 000
Date of first funding: February, 2022
Date of default: 29.03.2023
Date of Recovery: 17.07.2023
Recovery Time: 3,7 months
Principal repayment: 100%
Average interest: 5,89%
The journey from funded to defaulted to recovered
Funding date: Final stage in October, 2022.
The challenges faced
The borrower’s project was delayed due to economic uncertainties and liquidity problems. This resulted in payments becoming late, and ultimately it was necessary to default the loan. Having defaulted the loan, we took the legal steps required to initiate the enforcement process. We also met with several parties who expressed an interest in purchasing the claim, while continuing to exert pressure on the borrower to sell the property or refinance the loan. Our debt team maintained this pressure until the borrower was forced to find additional equity and secure new funding for the project.
Our work will continue
The Estateguru team works extremely hard to actively manage all of the defaults and recoveries in our loan portfolio through to a resolution that satisfies our investors. Our aim is to avoid capital losses at all costs, even when this requires the kind of extensive involvement that many other lenders would shy away from. Rather than write off losses, which would be the easy and simple way out, we remain committed to doing everything it takes to recover, at a minimum, the full principal for our investors.
We are confident that more recoveries are coming in the near future, and we approach every default with the same dedication, no matter the size of the loan or the obstacles faced during the process. We hope that you have found this information useful and that it has inspired you to reinvest your earnings in one of the great loans we currently have available.