Outcomes Statement 2023

Introduction

Relendex Limited is authorised and regulated by the Financial Conduct Authority (FRN: 723117). Relendex Limited is registered in England, Company Number 07486328. Registered Office: 99–100 Turnmill Street, London, EC1M 5QP.

This Outcomes Statement explains Relendex’s procedures for handling loans in default and provides information beyond the regulatory requirements of the Financial Conduct Authority (FCA).

It is designed to help Investors understand and monitor the performance of the Relendex loan portfolio by setting out:

Data on actual and expected default rates across all P2P loans originated by Relendex, segmented by risk category.
The assumptions used in assessing expected future default rates.
Data on actual Investor returns, with comparisons to Target Rates offered on the Relendex platform.
A clear explanation of the limitations of the data.

Note: Past performance data, including default rates and returns, should not be viewed as a guarantee of future performance.

Definition of Defaults

There is no universal definition of default, nor a standard timeframe for declaring a loan in default. Industry practice largely reflects consumer credit and SME lending, which differ substantially from commercial property lending.

The FCA acknowledges these differences and permits platforms to define their own classifications.

Expected Vs Actual Default Rates

Relendex reports both an Expected Default Rate and an Actual Default Rate.

In many lending businesses, these differ, as expectations are derived statistically from historical data, while actuals reflect outcomes.

At Relendex, however, the figures are the same because:

We perform a 100% audit of the loan book at every year end, rather than relying on statistical modelling.
The loan book is relatively small, making statistical sampling less meaningful.
Each loan is individually reviewed, and the probability of loss or recovery is assessed on a loan-by-loan basis.
If the estimated recoverability of any loan changes, this is reflected in that year’s Outcomes Statement.

This approach ensures that default rates published by Relendex are not projections based on historic averages but a current, audited assessment of the entire loan book.

Relendex Definition of Defaults

Relendex classifies defaults into four categories:

Technical Default
Formal Default
In Recovery
Loss

1) Technical Default

Commercial property loans involve multiple covenants and obligations. Breaches may be minor and not immediately visible to Investors.

A Technical Default arises where an issue can be remedied and the Borrower is actively working to resolve it. Examples include:

Delayed interest payment.
Breach of a Loan-to-Value (LTV) covenant.
Breach of a material covenant in the facility agreement.
Loan maturity reached, but extension negotiations are ongoing.
Implications: Default interest is not normally charged during a Technical Default.

2) Formal Default

Relendex does not apply a minimum period before declaring a Formal Default. Loans are closely monitored and may be placed into Formal Default before the term ends.

Cooperative Borrowers may restructure and avoid default.

Borrowers who fail to communicate, mislead, or renege on commitments are moved swiftly into Formal Default.

A Formal Default may be declared even if the loan is less than one day overdue, rather than applying the FCA’s 180-day convention.

A 90-day long-stop after contractual payment is adopted.

Implications of a Formal Default:

Default interest applies, typically 150% of the original coupon.
Increased risk of capital loss or non-payment of interest, though security increases the chance of recovery.
Loss of liquidity, defaulted loans cannot be traded on the Resale Marketplace.

3) In Recovery

Where a Borrower is actively seeking to resolve an Actual Default, Relendex may permit repayment without immediate enforcement.

Appointing a receiver can incur costs and erode Borrower equity; this is avoided where cooperation exists.

Relendex may nonetheless take legal action to safeguard Investors’ interests.

Implications:

Focus is on optimising capital and interest recovery.
Relendex may complete part or all of a development using company funds.
Legal action may be pursued against professionals if negligence is suspected.

4) Loss

There is no industry-wide standard for defining or forecasting losses.

Relendex’s Policy:

A loss is declared only once assets are realised and crystallised.
Additional recoveries (e.g. personal guarantees, negligence claims) may later reduce a declared loss.

Outcomes Methodology

Outcomes Statements are produced annually. Reports are finalised and published by the end of January following the reporting year.

Outcomes assume fully invested portfolios. Cash drag is highlighted in each report, as it can reduce investor returns. Managed portfolios minimise cash drag, while self-directed portfolios may experience more if reinvestment is delayed.

Loan Book Audit

Relendex does not rely on statistical sampling techniques. The loan book is relatively small and consists of a limited number of large, secured loans, so portfolio-level modelling is less meaningful.

Instead, Relendex conducts a 100% loan book audit at every year end:

Each loan is individually reviewed and assessed for probability of loss.
The methodology mirrors the approach taken in Relendex’s audited financial statements.
Where the estimate of recoverability for a loan changes, the adjustment is reflected in the current year’s Outcomes Statement.

This ensures that results reflect the actual status of every loan, not projections based on historical averages.

Defaults

Loans in default are shown clearly in the Outcomes Statement:

A loan placed in default does not necessarily imply a loss, particularly in the Senior A (<50% LTV) and Senior B (<65% LTV) categories.
Relendex reports defaults using its own categories of Formal Default and In Recovery, which are more relevant to commercial property lending than the FCA’s 180-day arrears rule.
The FCA 180-day definition is acknowledged, but in practice, it is not a meaningful indicator for secured property loans. Borrowers may refinance or restructure beyond 180 days, with investors ultimately repaid in full.

Actual and Anticipated Losses

Actual Losses are only reported when crystallised after security realisation. This has occurred only twice in Relendex’s history.

Anticipated Losses are derived from the 100% audit process. Specific provisions are made against loans in default, reflecting best judgment of recoverability by risk category.

Only changes in provisions are charged to the year in review. Provisions cannot be retrospectively adjusted once a Statement is published, though reversals may occur where recoveries exceed expectations.

Conservative accounting is applied, mezzanine or higher-risk tranches may be fully provided for, even if ultimate recovery later proves better.

General Provisions

A general provision is made for performing loans, though this is less precise by definition. Relendex’s conservative lending stance and focus on senior positions reduce the need for large general provisions.

Risk Management

Relendex discourages higher-risk investments. For example, anticipated loss-adjusted yields on mezzanine loans are deliberately reduced to highlight risk, despite no crystallised mezzanine loan losses to date.

Limitations of the Data:

Past performance is not a guarantee of future results.
Recovery times may be lengthy, creating opportunity cost not captured in reported returns.
Cash drag can materially affect actual investor outcomes.
Diversification is strongly encouraged to reduce concentration risk.

2023 (Legacy Names)	Harmonised Category	Description (LTV / Loan Type)	Category as % of Loans Originated	Expected Default Rate %	Actual Default Rate %	2023 Anticipated Loss-Adjusted Yield %	2022 Anticipated Loss-Adjusted Yield %	2021 Anticipated Loss-Adjusted Yield %	2020 Anticipated Loss-Adjusted Yield %
Senior RSP	A+	Max 50% LTV, Senior loans in Relendex Select Portfolio (RSP).	49.70	0.00	0.00	7.09	6.71	6.66	6.58
Senior A	A	Max 50% LTV, all other Senior (non-RSP) loans.	22.24	15.70	15.70	7.26	6.50	6.27	6.98
Senior B	B+	50–70% LTV, first charge (junior tranche of Senior loans).	16.82	4.20	4.20	7.54	7.61	6.75	7.02
Senior C	B	70–75% LTV, first charge (smaller slice of riskier Senior).	1.29	0.00	0.00	7.77	N/A	N/A	N/A
Mezzanine	B-	Max 80% LTV, second charge loans where Relendex originated the Senior.	N/A	N/A	N/A	N/A	8.51	8.00	6.92

Notes on Anticipated Loss-Adjusted Yield:

It is the best estimate of the total expected annualised loss rate applied to the whole life of the current loan book. It includes reinvestment of quarterly interest receipts and anticipates hypothetical losses on current performing loans.

Conclusion

This Outcomes Statement provides insight into Relendex’s approach to defaults, recovery processes, and anticipated performance. Investors are encouraged to diversify and reinvest efficiently in order to optimise returns.