BOSTON (Reuters) – San Francisco-based Colchis Capital Management LP, a pioneer backer of online direct lending platforms, is winding down its main funds as disruptions caused by the novel coronavirus have started to hit its consumer and real estate loans, according to materials reviewed by Reuters.

“The largest risk to the Colchis Income Funds is unemployment for our consumer loans and weakness in the housing market for our bridge real estate loans,” Colchis Chief Investment Officer Robert Conrads wrote in a letter to investors on March 31. “Moreover, there is no consensus as to the timing or strength of the recovery in employment and economic conditions.”

Colchis told investors to anticipate annual returns, based on a simulation, of around minus 1.7% if U.S. unemployment rises to 10%, versus a return of 4.2% if unemployment dips to 4%. The official U.S. unemployment rate now stands at around 5.5%, but is likely to be at least twice that, according to economists.

Representatives for the firm did not immediately respond to requests for comment.

Colchis, founded in 2005 and led by Conrads and his son Ted Conrads, managed nearly $1 billion as of Dec. 31, 2019, according to a filing with the U.S. Securities and Exchange Commission. The company invests in consumer and real estate loans and related securities and facilities, including relationships with online lenders Marlette Funding and PeerStreet, according to another document sent to investors last week.

Colchis has invested approximately $6 billion in more than 500,000 digital loans since 2011, according to its website.

Conrads also wrote that the severe economic impact of the coronavirus pandemic was “difficult, if not impossible” to reflect in monthly valuations of Colchis’ loan portfolio, making it challenging to treat investors looking to cash out fairly.

As part of the wind down, Colchis has suspended withdrawals, the letter said. It estimated a 19-month process to return all fund equity, according to the client materials.

Colchis is considering the launch of a successor investment vehicle focused on more attractive distressed debt opportunities, such as asset-backed bonds and consumer loan portfolios, one of the documents said.