macq
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Post by macq on Oct 10, 2019 16:04:51 GMT
Perhaps this will help clarify some points above: Loan Parameters
A bit of confusion may have been caused because we have tried to explain the arrangements that we have agreed with the borrower on loans that come over the platform. Basically it is our intention to work in partnership with the Borrower to bring multiple loan offerings to the platform. We had to therefore designed certain parameters to apply to this and future loans. The Borrower has no intention of selling its £375k investment in this loan, and is offering the full amount as a first loss piece. We however wanted to offer the borrower some future flexibility and constructed a framework for a potential reduction in their holding: Min 10% of total loan is held as first loss No trading in period of 4 months form drawdown Only trading at par Min hold cannot raise Ablrate Lenders hold above 80% LTGDV All to be with Ablrate consent In this particular loan, the Borrower would not be allowed to reduce its hold below £157k. Supporting Security
The Parent Company is transferring an investment of £630k to the Borrower’s balance sheet which will fall under Ablrate Lender’s debenture. This means Lenders have access to two projects in an event of default. The Borrower’s investments are often short-term in nature and these projects will be altered over time as they mature but the deal is that there is 100% on top of the outstanding loans. First Ranking Lender
The Lender is providing a development loan at a good commercial rate. The pricing on the Ablrate loan reflects its subordinated position but together the project will have a blended rate of 9.7%. Legal Charge
In this particular loan, the JV SPV will be the owner of the legal title and the first charge lender will be recorded as a chargee. The Borrower as 50% ordinary shareholder and sole preference shareholder is co-owner of the legal title. The Borrower has advised that in certain scenarios there will be a charge, in this case it is directly the legal co-owner on the land. thanks for the answers which make things a bit clearer and maybe more promising - but would like to ask if there is any connection between the borrowers £375k and their property bond/IFISA arm?
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boundah
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Post by boundah on Oct 10, 2019 16:11:02 GMT
I've not got a problem with ABL moving into property - my guess is they'll do a more honest job on valuations than certain other platforms I could mention, and likely to be better at chasing arrears. However, my issue with this loan is the complexity of the security. It's taken my small brain an hour to try and untangle what the underlying assets actually are, and who will have which charges over them. And that's even after ablrate's 'clarification' on this thread. So... not for me, at least just yet.
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criston
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Post by criston on Oct 10, 2019 16:21:33 GMT
I thought I had seen it all on FS with misleading GDV & LTV figures, but this one takes the biscuit.
Over half a million pounds disagrees with me though.
Edit. £168k disagrees with me though
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rgog
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Post by rgog on Oct 10, 2019 16:40:08 GMT
Very complicated. Basic investing principle if you don't understand it, don't invest in it. Bear in mind that when you invest in this as it is GDV the asset has effectively no value as any recovery will be hoovered up by the first charge holder. Therefor any "protection" can only come from the other security Ablrate have put in place and I will leave it to you to assess how that affects the risk/reward ratio and your own risk appetite.
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Post by Ace on Oct 10, 2019 17:19:59 GMT
Does this strike anyone else as a strange way for the borrower to offer us a first loss security? It would seem that they are lending to themselves, and paying ABLrate their platform free for the privilege.
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Post by Badly Drawn Stickman on Oct 10, 2019 17:30:40 GMT
Does this strike anyone else as a strange way for the borrower to offer us a first loss security? It would seem that they are lending to themselves, and paying ABLrate their platform free for the privilege. It looks that way in theory, i suspect in reality it is cost neutral. Its always the bits nobody will tell you that are the bits you really want to know.
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brianlom1
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He's not the Messiah, he's a very naughty boy!
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Post by brianlom1 on Oct 10, 2019 17:53:05 GMT
I'm caught betwixt and between at the moment. Following the Lendy debacle, I undertook to never lend again based on GDV valuations. On the other hand, we've been asking Abl to introduce new borrowers and that's what they've now done.
What would be the best way to inspire confidence in this loan? Would it be reasonable to expect Abl to suggest a point in time when LTV=70% (or is it in the nature of property developments that they have little value until complete)?
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KoR_Wraith
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Post by KoR_Wraith on Oct 10, 2019 20:47:06 GMT
I don't think this one's for me.
These days I try to invest cautiously on the basis that there'll be a reasonable recovery in the event that the lender defaults (i.e. asset-backed lending).
However good the intentions, track record and professionalism of those involved, the risk of total wipe-out in the event of things going sideways sits outside my risk profile.
I'm also not particularly comforted by the pledge of unseen further security, as this could well be in the form of high risk 2nd/3rd charge.
Despite all that, I can well understand those who weight the variables differently and come out on the side of invest. Perhaps I should be less pessimistic in my outlook, it's certainly a bit different from the refurbishment of derelict properties so often on offer in P2P land!
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blender
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Post by blender on Oct 10, 2019 22:07:54 GMT
I don't think this one's for me. These days I try to invest cautiously on the basis that there'll be a reasonable recovery in the event that the lender defaults (i.e. asset-backed lending). However good the intentions, track record and professionalism of those involved, the risk of total wipe-out in the event of things going sideways sits outside my risk profile. I'm also not particularly comforted by the pledge of unseen further security, as this could well be in the form of high risk 2nd/3rd charge. Despite all that, I can well understand those who weight the variables differently and come out on the side of invest. Perhaps I should be less pessimistic in my outlook, it's certainly a bit different from the refurbishment of derelict properties so often on offer in P2P land! I'm not disagreeing with you, but had taken the other view and put in a few £k. I do regard ablrate now as my risky lending - though have never had a loss - and have moved some funds into safer, less remunerative, lending. This one looks ok to me, given the rate, and I think that is because the basic development proposition looks sound and we should not need to call upon the convoluted security. Also this is a new venture which ablrate wish to develop, and they are going to be all over the first one, looking after my interests. I think if one mutters about the loans you don't like (which I may have done elsewhere) then one should also appreciate those loans that you find worth supporting. If you don't like anything, then its time to give up and look elsewhere. It all depends on how you see this platform as part of your overall investments.
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Post by ablrate on Oct 11, 2019 7:01:02 GMT
Does this strike anyone else as a strange way for the borrower to offer us a first loss security? It would seem that they are lending to themselves, and paying ABLrate their platform free for the privilege. We charge on their portion of the up front on a reduced rate and rebate the spread on their investment in the loan
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KoR_Wraith
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Post by KoR_Wraith on Oct 11, 2019 8:31:53 GMT
Does this strike anyone else as a strange way for the borrower to offer us a first loss security? It would seem that they are lending to themselves, and paying ABLrate their platform free for the privilege. We charge on their portion of the up front on a reduced rate and rebate the spread on their investment in the loan Could the borrower not simply have invested the £375k into the project? It almost seems like they're putting up £375k, plus fees, to borrow £500k, netting them possibly £100k enhanced liquidity. I understand they can pull some of their money back through secondary market sales but at a fixed 100% offer that's far from assured. *EDIT* See Ablrate's response below, my understanding was incorrect
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macq
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Post by macq on Oct 11, 2019 8:51:28 GMT
while this may be a transaction from a separate (and i assume non-connected in terms of this money) part of the business i still find it confusing that another part of the overall enterprise is offering up to 7 - 10% in an IFISA on property
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petrichory
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Post by petrichory on Oct 11, 2019 12:19:59 GMT
Edit: Witnessed by a hairdresser? That changes everything!
Let's hope this isn't a sign that we're all going to get a haircut! I had never seen a hairdresser being a witness on an MR01 form before, it was just an observation
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Post by ablrate on Oct 11, 2019 12:24:36 GMT
We charge on their portion of the up front on a reduced rate and rebate the spread on their investment in the loan Could the borrower not simply have invested the £375k into the project? It almost seems like they're putting up £375k, plus fees, to borrow £500k, netting them possibly £100k enhanced liquidity. I understand they can pull some of their money back through secondary market sales but at a fixed 100% offer that's far from assured. It is essentially in the project as it will draw down £875k minus fees. Doing it through the platform is a better way of managing the first loss
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criston
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Post by criston on Oct 11, 2019 12:29:17 GMT
There is a site advance initially and any draw down under the development advance will be against P******'s monitoring surveyors instructions. Is there tranche draw downs against the £3.11m P-----n first charge loan, or has it been taken in full ? Ablrate. Can I please request an answer to this question, as you appear to be answering other questions after this one.
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