EstateGuru recovers €500k from defaulted German loans
EstateGuru said it has recovered around €500,000 (£429,604) from defaulted loans in Germany in recent months and reiterated its target to recover 30 per cent of defaults by the end of the year.
The European peer-to-peer property lending platform has previously reported of issues with its German portfolio. In January this year, it decided to pause new investments in the country and revealed that it is investigating possible violations of its internal regulations by some members of its German team between 2020 and 2021.
“Due to local legal requirements, resolving the defaults in Germany is proving a long and frustrating process, but we are unwavering in our commitment to getting the job done, and we are starting to see results,” EstateGuru said in a new blog post on its website.
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The Estonia-headquartered firm said it has managed to resolve default cases within 12 months on average and has not incurred any losses to date.
However, it warned that “subdued activity” in the German real estate market has resulted in reduced transaction volumes and lower sales prices.
“Should the market activity fail to pick up in the upcoming months, there is a possibility that losses could be incurred,” EstateGuru said.
The platform has a dedicated group finalising strategies for recoveries in Germany, which will be ready for implementation this month.
It also revealed that it is digitising its documentation, which will streamline the enforcement process and boost the attractiveness of its portfolio for potential claim buyers.
“Considering Germany’s more bureaucratic environment and the lack of sufficient data for statistical accuracy, providing an exact timeline for the recovery of defaults in that market is difficult,” EstateGuru added. “We can only estimate that the process might take longer than in the Baltics and Finland. Nonetheless, recoveries are achievable, as demonstrated by the loans already repaid to investors in Germany.”
EstateGuru has taken a number of steps to improve credit quality in recent months, including higher valuation standards, a greater focus on repayment ability and borrower background, and the integration of Moody’s ratings into its models. The operations team has shifted its focus to be more proactive on late loan management.
In April, EstateGuru reported that it had passed its €700m lending milestone in the first quarter of this year, after completing 178 projects with a loan volume of €23m.