Stephen Bell, our Chief Risk Officer, has provided an update on the loan book performance

“The Wellesley loan book continues to evolve and now stands at 65 loans with combined committed facilities of £271m. During 2016 the drawn balanced increased by 10% to £163.6m which was made up of new loans and additional drawdowns on existing loans of £118.6m.

Since the firm’s inception it has supported the development of over 2,000 houses of which 822 relate to activities in 2016. The significant majority of these are homes valued below £250,000 with only 20% being worth more than £500,000.

Major Case Update
Regarding the three cases I referred to in February;
Case 1 – This was a £3.1m loan to develop 5 houses. Poor construction management, cost overruns and delays ultimately meant the project became unviable in its original form.
Update: Having stepped in the construction phase is going well with 2 of the 5 units completed and one under offer.

Case 2 – This loan totalled £5.3m relating to four properties. Health and safety issues occurred on site which resulted in construction delays.
Update: Having sold properties at a loss which has been written off, Wellesley is progressing recovery proceedings.

Case 3 – This was a £1.7m loan to develop one high-value single property. Complications arose from planning irregularities and ineffective cost control.
Update: Having sold the property at a loss that has been written off, Wellesley is progressing recovery proceedings.

Extension Risk
Of the 125 loans originated since the start of 2015, 20 (16%) are beyond the original term. This is within the firm’s expectations. In the previous review, I detailed how with development finance, a project taking longer to complete than its original contractual duration is not uncommon. When a loan is expired, it does not specifically indicate that there will be a loss and it should be noted that the expiry does not affect the security that we hold over the property.

Overall Provision Position
We started 2016 with a provision stock of £3.4m. After write offs of £2.3m in relation to Cases 2 & 3 above and a net increase of £0.8m in the year the provision stock at year end 2016 was £1.9m.

The net increase reflected additional provisions of £1.3m against 5 facilities offset by a partial release (£470,000) of the provision against Case 1 as a result of our decision to build out the scheme.

May Review
The most recent review completed in May for the Wellesley Group Investors Ltd Board confirmed we believe that remaining future expected losses will fall within the provision stock. This positive trajectory is evidenced by lifetime losses as a percentage of lifetime lending now being 1% – reported at 1.2% at the last year end”.


Stephen Bell, Chief Risk Officer

Bear in mind

Wellesley Property Bond

  • The Wellesley Property Bond has a fixed rate and duration.
  • The Wellesley Property Bond is an ISA eligible investment, allowing you to earn tax free interest on your investment. Please note, tax allowances and the tax efficient benefit of ISAs could change in the future.

Your capital is at risk and interest payments are not guaranteed. Investment in any Wellesley Property Bonds are not covered by the Financial Services Compensation Scheme (FSCS). In the event of a loan default or if Wellesley Secured Finance Plc becomes insolvent, you may lose some or all of your investment, including interest payments due. If you are in any doubt about making an investment or do not fully understand the risks, you are strongly recommended to consult an independent professional financial adviser before you subscribe.

Wellesley is the singular name for the following collective of companies, Wellesley Group Limited (09811856), Wellesley & Co Limited (07981279) and Wellesley Finance Plc (08331511). Wellesley Secured Finance Plc was established as a special purpose vehicle for the sole purpose of issuing asset backed securities and is not part of Wellesley Group.

The information contained in this website has been approved as a financial promotion for UK publication by Wellesley & Co Limited (FRN 631197) who is authorised and regulated by the Financial Conduct Authority (FCA). Wellesley Property Bonds are issued by Wellesley Secured Finance Plc (the Issuer) and is not authorised or regulated by the FCA.

Wellesley & Co Limited and Wellesley Finance Plc are registered in England and Wales and their registered office and trading address is at St Albans House, 57/59 Haymarket, London SW1Y 4QX. The registered address for Wellesley Secured Finance Plc is at 1 Bartholomew Lane, London, EC2N 2AX.


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