EstateGuru names new CEO amid strategy changes
EstateGuru has promoted chief operating officer Mihkel Stamm to chief executive, replacing founder Marek Partel who will remain chairman of the supervisory board.
In an annual review published on the European peer-to-peer lending platform’s website, Stamm said he had moved into his new role on 14 December 2022.
He thanked Partel and the board “for the faith they have shown in me” and said he was proud of “the dedication and versatility the whole team has shown in these testing times”.
Stamm noted that 2022 had been “an increasingly turbulent year” due to rising inflation, higher interest rates and increased geopolitical risk.
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“All of these factors had a direct impact on investor behaviour, the real estate market in general, and the capacity of some borrowers to return their loans in accordance with initial plans,” he said.
EstateGuru’s sales volumes fell by 10 per cent year-on-year to €183m (£161m) in 2022.
Stamm said that EstateGuru took the “very difficult but much needed decision” last year to cut its international workforce by more than a third and reduce its external development costs, with the aim of increasing the firm’s profitability in the first quarter of 2023.
“These cost cutting measures were necessary to secure the company’s sustainability amidst the current market turmoil and safeguard its continued success,” EstateGuru said.
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EstateGuru reported a strong performance in the Baltic states – its most long-established markets – over 2022, including a record 29 per cent year-on-year rise in loan volumes in Estonia to €69.19m.
It reported “a mixed year in Finland” due to a number of “problematic loans” that were originated before its local team was in place.
“As these were relatively large loans (almost €8m together) and given the lower origination volumes in Finland this year, they are heavily affecting the Finnish portfolio metrics, and pushing up the default rate to 34.7 per cent (€14.9m),” the update said. “We have adjusted our credit rules, and the more recently originated loans are of a higher quality.”
Meanwhile in Germany, EstateGuru has decided to temporarily halt new investment projects on its platform while it addresses issues with the portfolio.
The current Germany portfolio consists of €85.2m in outstanding loans, with 37.86 per cent being late in payments and 38.42 per cent in default. EstateGuru said that “the market was very different a-year-and-a-half ago and many financial institutions in Germany (including our competitors) and elsewhere are suffering similar challenges.”
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EstateGuru also said that it is currently investigating possible violations of its internal regulations by some members of its German team between 2020 and 2021.
“Once we have recovered the loans and improved the portfolio, we will begin the process of introducing new loans in Germany,” the update said.
Stamm said that its planned expansion into the UK and Spain has been postponed. The firm plans to re-evaluate the situation in the second half of 2023.
“Switching from a growth to a sustainability mindset and downsizing our operations in certain markets has not been easy, but with adversity comes the opportunity for learning, and growth of a different kind,” Stamm said.
“As we enter the new year, we remain confident in our business model, and dedicated to our vision of making profitable investment possible for anyone, anywhere. Real estate remains a massive market for investment globally, and we will continue to bring new, profitable and transparent investment opportunities, secured with real estate collateral, to our investors.”