r00lish67
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Post by r00lish67 on Dec 4, 2017 22:28:53 GMT
Hi fundingsecure , just getting my teeth into this one, but I'm already a little stuck with the LTV. The loan is £1.675m against a current value of £2m. However, the LTV is stated as 67%, but by my maths, the current LTV is £1.675m/£2m *100 = 84%. I had thought that you might mean the LTGDV of the full facility, but that's 63%. Meanwhile, the loan text suggests the LTV "is subject to a maximum of 65% at any time", which it's currently way over, and which is even exceeded by your stated LTV.Edit: I think it's just a typo in your general description, as the value states £2m rather than £2.5m. Although that does still exceed your stated covenant of being a maximum of 65% LTV at any time.. |
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09dolphin
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Post by 09dolphin on Dec 4, 2017 22:48:37 GMT
Lenders should also take into account that this loan, according to FS, effectively includes a cross guarantee against another loan (with the implications this has) before making a decision to lend.
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Post by mrclondon on Dec 4, 2017 23:39:16 GMT
VR page 5 gives internal area as 148 sqm / 1600 sq ft.
VR page 9 gives 4 comparables, which work out on a per sqft basis as £1350, £1545, £1270, £1560 respectively
As a sense check:
at the low end of that range 1600 sqft x £1270 / sqft would be just over £2m
and at the top of that range 1600 sqft x £1560 / sqft = £2.5m (the VR valuation)
Loan is £1.675m (of a £2m facility)
LTV @ £2m = 84%
LTV @ £2.5m = 67%
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ashtondav
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Post by ashtondav on Dec 5, 2017 8:09:39 GMT
Woof! It's a dawg.
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r00lish67
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Post by r00lish67 on Dec 5, 2017 9:05:22 GMT
Lenders should also take into account that this loan, according to FS, effectively includes a cross guarantee against another loan (with the implications this has) before making a decision to lend.
Yes, I was wondering what the implications of this exactly are - does this make this loan the same as other '2-for-1' loans e.g. 2 Bristols, or Taunton in its first incarnation)? Given they haven't listed them under 1 listing, I'm assuming there's some sort of distinction, but I'm not sure what it is.
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baldpate
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Post by baldpate on Dec 5, 2017 9:50:02 GMT
Yes, I was wondering what the implications of this exactly are - does this make this loan the same as other '2-for-1' loans e.g. 2 Bristols, or Taunton in its first incarnation)? Given they haven't listed them under 1 listing, I'm assuming there's some sort of distinction, but I'm not sure what it is. A better comparable might be the Norfolk couplet: 4045698166 (6-bed house) & 1659874045 (Farm & farmhouse). This pair are to the same borrower, with similar "all-monies" cross guarantees. Both now 14 months overdue, and have a history which has proceeded in lockstep, both having been "in the process of refinancing" for many months. It's my (unconfirmed) presumption that because of the cross-guarantee, FS are insisting that both properties be refinanced as part of the same deal. If true, this might be detrimental to participants in the better of the two loans - a possible downside to cross guarantees like this. Particularly when there is a disparity in the nature of the loans, as in the case of these two new loans where one is a pure bridge and the other more like a development loan.
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r00lish67
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Post by r00lish67 on Dec 5, 2017 9:57:48 GMT
Yes, I was wondering what the implications of this exactly are - does this make this loan the same as other '2-for-1' loans e.g. 2 Bristols, or Taunton in its first incarnation)? Given they haven't listed them under 1 listing, I'm assuming there's some sort of distinction, but I'm not sure what it is. A better comparable might be the Norfolk couplet: 4045698166 (6-bed house) & 1659874045 (Farm & farmhouse). This pair are to the same borrower, with similar "all-monies" cross guarantees. Both now 14 months overdue, and have a history which has proceeded in lockstep, both having been "in the process of refinancing" for many months. It's my (unconfirmed) presumption that because of the cross-guarantee, FS are insisting that both properties be refinanced as part of the same deal. If true, this might be detrimental to participants in the better of the two loans - a possible downside to cross guarantees like this. Particularly when there is a disparity in the nature of the loans, as in the case of these two new loans where one is a pure bridge and the other more like a development loan. Yes, that's exactly my fear. If I can get behind the valuation of the PBL for S****K (which I currently can't due to the points Mrc highlighted), then I might be interested. But compounding it with taking on the risk of a DFL as well, makes it very offputting to me currently.
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adrian77
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Post by adrian77 on Dec 5, 2017 11:59:12 GMT
Agree with all of the above - also I note a house in the same Place sold for
£1.5m in sep 2016. This sold house looks stunning to me so if the London market cools then I wonder if we have yet another very optimistic valuation.
If this lender is refinancing then I am worried - he should be refinancing away from
FS to a much lower rate - £2m at 20% is £400K p.a. so how is that going to be financed?
And there is another loan so currently £2.295m is being borrowed - well that would keep me awake at night. Wonder why the banks won't lend at a cheaper rate!
If this borrower is a high net worth individual then he won't need to borrow at these rates!
Another interesting one to watch.
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rambler
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Post by rambler on Dec 5, 2017 15:22:56 GMT
Thsi loan is proving not very popular so far...
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Post by mrclondon on Dec 5, 2017 15:48:44 GMT
Thsi loan is proving not very popular so far... Yes, I'm quite surprised seeing c. £350k bid on the other loan, but just c. £250k on this one at the time of writing. FWIW I skipped the other loan, and put my normal per loan bid size into this one. As the owner of a 4 bed townhouse in inner London myself, albeit one of more modern vintage, I can say that the availability of townhouses in inner London tends to be relatively low, and planning permission to build new ones is pretty much impossible to obtain on the grounds of low density. Given the location, I'm reasonably confident that a firesale would realise the loan value + accrued interest + costs. Only downside I can see is no allocated parking space.
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mikes1531
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Post by mikes1531 on Dec 5, 2017 16:13:04 GMT
I think what's making me hesitate to invest is the proposed refurbishment and resulting £3.2M 'value' in the current uncertain times. Also, when people buy a £3+M property, do they want to accept what someone else has designed? Or would they rather have some input into the process so that the result is what they want it to be? Is this the right time to be ploughing £hundreds of k's into a property in the hope that the refurbishment will add more than that to the value?
I don't think we've been given any clue as to the cost of the proposed refurbishment -- though I note the VR suggests the property could be reinstated completely for £800k -- or how long it is expected to take to complete. I do note that the most recent 'comparable' in the VR was from 10 months ago, and the others were from 12, 18, and 20 months ago. That suggests to me that the market is pretty thin/slow, and that this loan will require at least one renewal before it sells, and possibly another. At nearly 70%, the LTVs of these loans don't give any scope for rolling accrued interest into a renewal, so the borrower will have to come up with something around £200k to renew them in six months. Do they have the resources to do that? (Might some of the £325k remaining in the FS facility be destined to fund the renewal?)
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rhmc
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Post by rhmc on Dec 5, 2017 18:22:04 GMT
It's also clearly suffered movement in the past which is detectable from the photo and from the valuation report. I'd say there's a high chance this needs some remedial work which is going to be expensive to perform in that area of London.
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qlassa
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Post by qlassa on Dec 5, 2017 22:29:47 GMT
It's also clearly suffered movement in the past which is detectable from the photo and from the valuation report. I'd say there's a high chance this needs some remedial work which is going to be expensive to perform in that area of London. Not even a photo, this is a screenshot from google street view...
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locutus
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Post by locutus on Dec 6, 2017 10:54:04 GMT
VR page 5 gives internal area as 148 sqm / 1600 sq ft. VR page 9 gives 4 comparables, which work out on a per sqft basis as £1350, £1545, £1270, £1560 respectively As a sense check: at the low end of that range 1600 sqft x £1270 / sqft would be just over £2m and at the top of that range 1600 sqft x £1560 / sqft = £2.5m (the VR valuation) Loan is £1.675m (of a £2m facility) LTV @ £2m = 84% LTV @ £2.5m = 67% To add another data point to your list, 6 S**e Place sold in Sept 2016. It had a GIA of 1413 sq ft and sold for £1.5m giving an overall price per sq ft of £1060.
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adrian77
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Post by adrian77 on Dec 6, 2017 11:30:34 GMT
Totally agree - I renovate houses of a similar size and age although not in London. To have a loan of £1.675m against a 200 year old house without a full structural report leaves me speechless. The report given is a quick visual inspection (as they state) with such technical English such as "There are two secondary bathroom comprises..." (sic). As frequently happens in such Georgian houses once the plaster etc is removed you can find horrible suprises such as rotten joists, collapsed internal walls, rotten roof rafters etc etc. Believe me such remedial work is eye-wateringly expensive outside London let alone inside!
Maybe this is why this house was sold relatively cheap in 2016?
Given that the other loan is to reschedule existing debts I am really concerned about cashflow for this project. If this one defaults then the owner will have a glodified building site on his hands
As I have said before I am not convinced such short-term high interest repayments are a profitable way to fund property development.
This is yet another interesting one to watch but unless we are given a lot more information I would not touch it with a barge-pole.
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