dovap
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Post by dovap on Dec 19, 2017 11:56:25 GMT
seems tricky to get 70% ltvs to return what they should when the unexpected happens.
At 100% - well good luck to those on this punt
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star dust
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Post by star dust on Dec 19, 2017 12:06:42 GMT
Part of the loan description addressing the exit issue states "loan agreements carry covenants with sales milestones which will be monitored as well as requirement for the redevelopment to be complete in good time to allow for the legal completion of the sales" Something I'd quite like to see is a development schedule, and as there are apparently contractual sales milestones it would be good to have an idea of the scale and time frame around these too. I appreciate that there are few capital developments that ever complete on time and within budget, and you can virtually guarantee the unexpected, but it would give me a better idea of the feasibility of the project and more information to access progress during the course of the loan. Is there any information on an expected purchase completion date or refurbishment start date at least MoneyThing? Just realised it's gone live as I'm writing this - nearly 25% gone in the first 5 minutes.
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rogerbu
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Post by rogerbu on Dec 19, 2017 12:17:23 GMT
I'd go into this (if at all) with the view that the true LTV is 100% (or maybe even worse) and added value (if it ever occurs) will only come with developer money being put in to start work on constructing and selling the flats. What incentive is there for the developer to start? I feel that their interests may be in conflict with ours. We fund the purchase. If they never start developing, then in 2 years time we are left with an office block block that is more derelict than now. Whilst they have no real losses. I've decided not to invest in this one.
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sirius
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Post by sirius on Dec 19, 2017 12:29:55 GMT
Part of the loan description addressing the exit issue states "loan agreements carry covenants with sales milestones which will be monitored as well as requirement for the redevelopment to be complete in good time to allow for the legal completion of the sales" Something I'd quite like to see is a development schedule, and as there are apparently contractual sales milestones it would be good to have an idea of the scale and time frame around these too. I appreciate that there are few capital developments that ever complete on time and within budget, and you can virtually guarantee the unexpected, but it would give me a better idea of the feasibility of the project and more information to access progress during the course of the loan. Is there any information on an expected purchase completion date or refurbishment start date at least MoneyThing ? Just realised it's gone live as I'm writing this - nearly 25% gone in the first 5 minutes. Yes, this loan gets more 'interesting' the more one looks into it. A lack of clear, unambiguous and meaningful information. As you rightly state, not even a development schedule. Nothing to give one any confidence that the project is at all feasible.
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seeingred
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Post by seeingred on Dec 19, 2017 12:34:00 GMT
"If they never start developing, then in 2 years time we are left with an office block block that is more derelict than now. Whilst they have no real losses."This situation can be seen on quite a few DFL type loans. This is why the valuation of the current state of the building is so important - what would it sell at if put into an auction? I have invested but with no great confidence - and only because there is so little else available that is any better. These large commercial projects (office blocks into flats etc) have less certain valuations than simple domestic housing projects but even these go wrong (Exeter on Lendy for example where the developer had starry eyed ideas of value) and I am now concerned by MT's development at BOLL***** - see another thread -it seems to have stalled. The key point on all these (as mentioned by star dust earlier) is that there needs to be a clear idea of what is plannned, how it is to be scheduled, and then a keen eye needs to be kept on the site to spot when things start to go wrong - as opposed to when they have already gone badly wrong (Exeter). It doesn't work in all cases. At Isle of Wight Lendy managed somehow to get into a complete mess without so much as a sod of earth having been turned over.
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Post by sannytwist on Dec 19, 2017 12:39:06 GMT
Hi all, thank you for your valuable insight and discussion on this loan. Think l will also give it a miss, like to keep my few pence in my own bank but good luck to those who invest.
Merry xmas everyone !
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Post by mrclondon on Dec 19, 2017 12:45:32 GMT
For me the valuation is the main sticking point, or more specifically ignoring the headline figures on the valuation and calculating my own worst case firesale value. I have done a sensitivity analysis on the £ / sqft figures I've looked at the comparables listed on the VR and observe: Studios range £164-£196 / sqft (average £177) 1 Beds range £133-£167 / sqft (average £150) 2 beds range £113-£138 / sqft (average £123) I've looked at the VR valuations for the new apartments and observe Studios range £211-£220 / sqft (average £215) 1 Beds range £187-£204/ sqft (average £195) 2 beds range £171-£184 / sqft (average £177) Looking at the GDV across the 59 apartments Using the VR valuations of £215/£195/£177 gives a GDV of £5.4m Using the highest comparable valuations of £196/£167/£138 gives a GDV of £4.4m Using the average comparable valuations of £177/£150/£123 gives a GDV of £3.9m Valuing the 2 beds at the top of the comparable range i.e. £138/sq ft gives a range of values £77,000 to £89,000 (av £84,000) which correlates reasonably well with what harryvederci observed yesterday in this post that 2 beds currently available in BD1 range up to £90,000
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sirius
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Post by sirius on Dec 19, 2017 13:22:26 GMT
mrclondon
We appear to be on the same page, as my calculations for the GDV came out at £4.7m which is just about the average of your last three calculations.
The 2 beds appear to be c.£15-20k overpriced.
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elliotn
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Post by elliotn on Dec 19, 2017 15:32:07 GMT
Part of the loan description addressing the exit issue states "loan agreements carry covenants with sales milestones which will be monitored as well as requirement for the redevelopment to be complete in good time to allow for the legal completion of the sales" Something I'd quite like to see is a development schedule, and as there are apparently contractual sales milestones it would be good to have an idea of the scale and time frame around these too. I appreciate that there are few capital developments that ever complete on time and within budget, and you can virtually guarantee the unexpected, but it would give me a better idea of the feasibility of the project and more information to access progress during the course of the loan. Is there any information on an expected purchase completion date or refurbishment start date at least MoneyThing? Just realised it's gone live as I'm writing this - nearly 25% gone in the first 5 minutes. I liked that and then wondered how quick/objective the MT updates' filter would be. A fixed interval update would be perfect. Having had to chase up updates expected 'next week' from September and October I'm unconvinced. Apart from workload I sometimes wonder if we are being protected from bad news to avoid panics etc. Sooner the better for bad news as far as I'm concerned; if borrower forbearance is being given then better to tell us from Day 1 of a missed payment / sales' covenant etc than to let us continue investing under misinformation.
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Dec 19, 2017 15:39:50 GMT
Apologies for any confusion, there's no DDC spokesperson AFAIK. What my posting meant was that if there's a reasonable consensus of opinion on an offering, it will often filter on to the Main Board as veiled or otherwise comments, that you can take on board, or not. Does that make better sense? Diplomacy ozboy! Help! I am in a bad panto, get me out of here🤡 Perfect strine translation you very naughty boy.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Dec 19, 2017 18:40:22 GMT
My Erudition Lessons on The Queen's English Grammar need more work.
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metoo
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Post by metoo on Dec 20, 2017 1:06:23 GMT
There won't be development tranches on this loan, so GDV is relevant to the calculation of the current (residual) valuation, and the profitability. I am generally sceptical of residual valuations offered in p2p so I am looking at this as 90% loan-to-purchase-price at current market conditions. The success of this scheme seems to depend on investors placing deposits for the flats off-plan. If works get well underway, the LTV will improve and should become quite low.
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Post by mrclondon on Dec 20, 2017 12:35:57 GMT
MoneyThing may I make a couple of suggestions: a) You say on the loan details "The individuals behind this company are experienced property developers and investors who have developed out numerous projects around the UK. " Perhaps you could encourage them to prepare a "Professional Portfolio" document highlighting a selection of these numerous projects. b) Perhaps you could negotiate some additional "makeweight" security, e.g. 2nd charges on their residential homes. I think my overiding concern is that if after purchasing the property the borrowers were to decide that there is actually no profit margin (or worse a guaranteed loss) on this project they might choose to simply walk away given that they have relatively little "skin in the game" (10% of purchase price + costs).
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Post by sannytwist on Dec 20, 2017 13:39:48 GMT
MoneyThing may I make a couple of suggestions: a) You say on the loan details "The individuals behind this company are experienced property developers and investors who have developed out numerous projects around the UK. " Perhaps you could encourage them to prepare a "Professional Portfolio" document highlighting a selection of these numerous projects. b) Perhaps you could negotiate some additional "makeweight" security, e.g. 2nd charges on their residential homes. I think my overiding concern is that if after purchasing the property the borrowers were to decide that there is actually no profit margin (or worse a guaranteed loss) on this project they might choose to simply walk away given that they have relatively little "skin in the game" (10% of purchase price + costs). Very well written point a + b, can't agree enough.
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Brainer
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Post by Brainer on Dec 20, 2017 15:39:37 GMT
Sales Brochure (pg26 somewhat covers mrclondon's part (a)) and Development Appraisal added to the loan details.
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