Dear Investors,
As we look back on the first half of 2024, I’m happy to share our progress, challenges, and future plans with you. Thank you for your confidence, reflected in ongoing investments and thousands of new investors joining every quarter. Your trust and support have been crucial to our journey.
Since our inception in 2014, we have achieved the significant milestone of facilitating €815 million in investments. Of this amount, over €550 million have been repaid, and more than €80 million in returns have been distributed to investors. With these loan volumes, Estateguru continues to be the largest real estate investment platform in the Baltics, consistently delivering annual interest rates of 10% to investors over the past 10 years.
2024 half-year milestones and highlights
Being a market pioneer requires embracing successes and learning from experiences. Over the years, we’ve expanded into various markets, gaining extensive expertise in loan origination, due diligence, and default recoveries. Today, we focus on our core markets, leveraging the best credit knowledge from traditional banks and refining it to provide a swift customer experience.
The first half of 2024 demonstrated steady monthly loan volumes, consistent repayments, solid earnings for our investors, and the successful funding of outstanding projects. We also observed increased activity from large new investors, who contributed investments ranging from €50,000 to €200,000 per project. Here’s a full summary of our numbers for 2024:
- €40.4M funded in new loans
- 10.88% (€6.9M) average return (XIRR)
- €47.5M repaid to investors
- €5M of principal recovered from defaults
- 5,350 new investors joined, bringing the total to over 161,000
2023 solid portfolio performance
Last year, we significantly tightened our credit policies, and we are one of the first financial companies in the Baltics to implement Moody’s Analytics score system, aligning our standards with those of traditional financial institutions. Additionally, we became licensed to provide our services across the EU. This has bolstered the security of our investments and increased investor confidence. In 2023, we achieved €99 million invested in new loans. Of these 95% demonstrated positive results: around €43.5 million have already been repaid, €50 million are being serviced on time, and only €5.5 million are behind schedule. We continue to maintain a strong return of over 10% net interest, supported by robust real estate collateral. We continue improving and adjusting to the market and aim to keep quality at the same institutional grade level also for 2024.
Recovery efforts
During the first 6 months of the current year, we have recovered €5 million in principal. There are markets, like Germany, where the process is lengthy and complex but we assure you that recovering defaults has been and remains our top priority. Estateguru has already invested over €1 million of its funds and continues investing to ensure the recovery process will end up with the best possible outcome for our investors.
Despite the lengthiness, once all formalities have been carried out, our debt servicing partners in Germany can proceed with enforcing the mortgages securing the loans, shifting the focus from “if” to “when exactly and how much” investors will recover. Significant efforts are ongoing, including partnering with the experienced debt collection company Steinberg Management, which has reported progress on all problematic loans. You can find more details in our latest update on German loans in our recent blog post: 7 Key Questions About the German Loan Portfolio.
Estateguru has historically recovered more than €40 million from defaulted loans, mainly in the Baltics and Finland. In 2023, the platform recovered a total of €14.6 million across its markets and this year, as said above, we have recovered €5 million of principal, and more recoveries are expected in the second half of the year as bigger cases are resolved.
Path to profitability in 2024
Starting from 2023, we shifted from a high-growth strategy to a focus on sustainable growth and profitability. Ensuring profitability is crucial for delivering the best performance on our portfolio for investors. To achieve this, we have taken decisive steps to make our business model both profitable and sustainable. This includes reducing operational costs and increasing revenues, which involved laying off a fifth of our workforce. Although these decisions were difficult, they are necessary for our efficient operation. For more information, please read the press release.
In June, we adjusted our fee structure to better manage the operational costs associated with maintaining funds in inactive accounts, specifically those where money has been idle for over a year without being invested. We understand this change has raised questions, so to clarify – the inactive account fee only applies if there is a positive balance in the account. Additionally, withdrawals remain free within a given notification period for investors who would be impacted by the fee but wish to withdraw funds before the fee is applied.
We firmly believe that a financially strong and sustainable platform is in the best interest of all investors, as it allows them to continue investing in new projects and earning income on their investments. For a detailed look at our annual report on business numbers last year, please refer to our 2023 Annual Report.
Strategic growth plans
During the upcoming months Estateguru will launch a new investment portal, currently in the testing phase, and introduce new investment products for our investors. Following this, we will develop a dedicated investment app to improve accessibility and convenience for our investors. All these new tools are developed with one key focus in mind: to develop even further the user experience for all Estateguru investors.
At the same time we will maintain our commitment to delivering high-quality fixed-interest returns from real estate investments by operating sustainably, bringing high-quality projects to our platform, and ensuring effective recoveries. The steps we’ve taken to enhance our operations, coupled with your unwavering support, have solidified Estateguru as a dependable platform for real estate investments. Your trust, confidence, and partnership are invaluable to us, and I look forward to continuing this successful journey together.
Kind regards,
Mihkel Stamm
CEO, Estategu
