Relendex Loan Tranches
At Relendex we know that no two Lenders are the same when it comes to returns and risk appetite. It is for this reason that we now offer our Senior and Junior Tranche structure.
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What are Loan Tranches?
Definition
Tranche is a French word meaning 'slice' or 'portion'. In the world of investing, it is used to describe a security that can be split into smaller pieces
Risk Appetite
Some of our loans will be split into two parts and each part with a different Loan To Value and rate of return
Security
As with all our loans, the entire loan is secured by way of First Legal Charge over the property or assets pledged by the borrower
What are Loan Tranches?
Definition
Tranche is a French word meaning 'slice' or 'portion'. In the world of investing, it is used to describe a security that can be split into smaller pieces
Risk Appetite
Some of our loans will be split into two parts and each part with a different Loan To Value and rate of return
Security
As with all our loans, the entire loan is secured by way of First Legal Charge over the property and assests pledged by the borrower
How does it work for Lenders?
Secured* Junior Ranking Tranche
The Junior Tranche offers Lenders with a larger risk appetite an investment with a higher adjusted risk a greater return.
Lenders investing in Junior Tranches, will be repaid their principal and any unpaid interest out of the remaining asset security sale proceeds after the Senior Tranche investors have been repaid their loan principal and any unpaid interest.
Since the Junior Tranche Lenders rank behind the Senior Tranche Lenders, in the case of a default, they will receive a higher interest rate reflecting the higher risk.
Lenders investing in Junior Tranches, will be repaid their principal and any unpaid interest out of the remaining asset security sale proceeds after the Senior Tranche investors have been repaid their loan principal and any unpaid interest.
Since the Junior Tranche Lenders rank behind the Senior Tranche Lenders, in the case of a default, they will receive a higher interest rate reflecting the higher risk.
Secured* Senior Ranking Tranche
The Senior Tranche offers risk-averse Lenders a lower risk investment with a lower return.
Lenders investing in Senior Tranches will have their capital and interest returned to them as a priority (ahead of the Junior Tranche lenders) out of the sale proceeds of the asset security.
The interest rate attaching to the Senior Tranche will be lower than the Junior Tranche reflecting the lower risk because of the priority of their security.
Lenders investing in Senior Tranches will have their capital and interest returned to them as a priority (ahead of the Junior Tranche lenders) out of the sale proceeds of the asset security.
The interest rate attaching to the Senior Tranche will be lower than the Junior Tranche reflecting the lower risk because of the priority of their security.
Questions?
You can find more information in our FAQ
Why has Relendex introduced Tranches?
This process allows Lenders with different risk appetites to participate in the same loan. This means that those lenders placing security of their investment as their major consideration can now invest in the least risky part of each loan.
How do Tranches work?
The loan to a single borrower is split into two parts by reference to the Loan to Value (LTV) as determined by the independent professional valuation of the asset security provided at the time of the loan auction.
Can anyone invest in the Junior tranches?
The answer depends upon personal circumstances. However, so long as a Lender takes the time to build a portfolio of Loan Parts, even the cautious Lender may wish to maximise returns on their investments by including some Junior Tranches without taking on too much risk.
Relendex Limited is registered in England, Company Number 07486328
Registered Office: 99-100 Turnmill Street, London. EC1M 5QP
Registered Office: 99-100 Turnmill Street, London. EC1M 5QP
Important Notice
Relendex Limited is authorised and regulated by the Financial Conduct Authority (FRN: 723117).
Lenders participating in these arrangements should be clearly aware that any sum lent through the Exchange is a loan and not a deposit and its repayment is not guaranteed. It is in the nature of an investment opportunity. Any investor should consider an appropriate spread of risk. Non-institutional investors should seek professional advice before lending through the Relendex Exchange.
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