ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 20, 2016 15:09:42 GMT
Does anyone know which council it is? Some councils actually discourage increasing employment and so manage their planning policies to follow that concept. Harrogate for one for those who don't believe me. Bassetlaw, link to planning is in the info pack
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ben
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Post by ben on Apr 20, 2016 15:20:49 GMT
Looks like they are just an introducer, the valuation should matter to much if it is a first charge. It is the 2nd charge which would have far more to worry about, main problem here would be if TC called there's in like ilmoro said and we have to wait awhile for it all to go through recovery.
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Post by Deleted on Apr 20, 2016 15:31:40 GMT
Does anyone know which council it is? Some councils actually discourage increasing employment and so manage their planning policies to follow that concept. Harrogate for one for those who don't believe me. Bassetlaw, link to planning is in the info pack Strategic plan is obviously big on housing but sees logistics and transport as a major source of employment and recognises it has a lot of brownfield sites that would be more suitable for transport hubs than housing. Flooding is also an issue in the general council area. Checked the Agency and they are just out of flood risk (floods occur to the north west) so one less thing to think about It looks like they would make more money selling trucks than moving stuff... It is unusual for transport companies to actually own land and it makes them cash poor. Profit for 2015 is enhanced by the truck sales while 2014 reduced by massive commissions which appear to have been stopped. So let's guess a underlying real profit of £150k a year. I'm going to guess they are paying 18%. for 475k over the first three years. 18% of 475. is £85 ish so they can support the loan from profit at least. It has the feel of a company working to keep its profits down and so lower its taxes while raising its real assets.
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stevio
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Post by stevio on Apr 20, 2016 15:45:15 GMT
The valuation in the report is based on full planning permission having been granted. As this is not (yet) the case, I would be more interested in the present value. The borrower purchased the site for £725,000 so I would be sceptical regarding any valuation above this price for the present status. £475,000 from MT plus £300,000 from TC gives a total of £775,000. If we take the purchase price as the value, this gives a LTV of £107%. I think that I might stay clear until planning permission is resolved. Shame, as a 4.5 year loan would fit my needs quite well at the moment. Mt loans should be OK as they have first charge, though I suppose the danger is if The TC loan goes into default they will invoke their charge focing MT to do the same and leaving us stuck in a non-paying recovery loan. Site does have Outline Planning according to the info pack so some hope value. Figures dont give me great confidence in the new partners assessment that the loans are 'well-secured' MoneyThing what stake does the new lender have in the loans, first lost, buyback? Are they just an introducer rather than a partner in the more usual sense on MT? I'm not so sure........ I like to see that the borrower has something to lose by defaulting. Currently, it appears, the borrower is taking a chance on an expansion of the business, but taking that chance with entirely other people's money! Should the business expansion not go to plan, the borrower can easily just walk away and let the lenders sort it out between them. Yes, the first charge should be covered, but still, who wants to be in a loan in recovery? The risk risk lies in this expansion working for the business and with no capital at risk for the company, there is much less of an incentive to make it work. With the current LTV, I fear the risk has been passed from the borrower to the lender.
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Post by MoneyThing on Apr 20, 2016 15:52:43 GMT
The valuation in the report is based on full planning permission having been granted. As this is not (yet) the case, I would be more interested in the present value. The borrower purchased the site for £725,000 so I would be sceptical regarding any valuation above this price for the present status. £475,000 from MT plus £300,000 from TC gives a total of £775,000. If we take the purchase price as the value, this gives a LTV of £107%. I think that I might stay clear until planning permission is resolved. Shame, as a 4.5 year loan would fit my needs quite well at the moment. Mt loans should be OK as they have first charge, though I suppose the danger is if The TC loan goes into default they will invoke their charge focing MT to do the same and leaving us stuck in a non-paying recovery loan. Site does have Outline Planning according to the info pack so some hope value. Figures dont give me great confidence in the new partners assessment that the loans are 'well-secured' MoneyThing what stake does the new lender have in the loans, first lost, buyback? Are they just an introducer rather than a partner in the more usual sense on MT? Afternoon ilmoro. F&P is considered as an Introducer rather than Partner (since we are originating the loan). As such, there is no buyback or 1st loss mechanism. Kind regards, Ed.
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alison
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Sanctuary!!
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Post by alison on Apr 20, 2016 15:57:08 GMT
Mt loans should be OK as they have first charge, though I suppose the danger is if The TC loan goes into default they will invoke their charge focing MT to do the same and leaving us stuck in a non-paying recovery loan. Site does have Outline Planning according to the info pack so some hope value. Figures dont give me great confidence in the new partners assessment that the loans are 'well-secured' MoneyThing what stake does the new lender have in the loans, first lost, buyback? Are they just an introducer rather than a partner in the more usual sense on MT? I'm not so sure........ I like to see that the borrower has something to lose by defaulting. Currently, it appears, the borrower is taking a chance on an expansion of the business, but taking that chance with entirely other people's money! Should the business expansion not go to plan, the borrower can easily just walk away and let the lenders sort it out between them. Yes, the first charge should be covered, but still, who wants to be in a loan in recovery? The risk risk lies in this expansion working for the business and with no capital at risk for the company, there is much less of an incentive to make it work. With the current LTV, I fear the risk has been passed from the borrower to the lender. Is the borrower not putting in £250k?
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SteveT
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Post by SteveT on Apr 20, 2016 15:57:09 GMT
I wouldn't want any part of the 2nd charge loan, but I've seen plenty worse than the MT element.
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Greenwood2
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Post by Greenwood2 on Apr 20, 2016 16:12:07 GMT
Avoided this one on TC. I guess F&P thought TC lenders wouldn't go for 10% on the first charge, so put up the second charge at 12%, it was fully underwritten at that, but I expect the underwriter got a better rate than the headline 12%.
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ben
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Post by ben on Apr 20, 2016 16:20:03 GMT
I'm not so sure........ I like to see that the borrower has something to lose by defaulting. Currently, it appears, the borrower is taking a chance on an expansion of the business, but taking that chance with entirely other people's money! Should the business expansion not go to plan, the borrower can easily just walk away and let the lenders sort it out between them. Yes, the first charge should be covered, but still, who wants to be in a loan in recovery? The risk risk lies in this expansion working for the business and with no capital at risk for the company, there is much less of an incentive to make it work. With the current LTV, I fear the risk has been passed from the borrower to the lender. Is the borrower not putting in £250k? I would guess they will use that if they get planning permission, the two loans cover what they paid for the assets, so they can use that £250K for any works that need doing. If it does not get planning permission they can just let the loans default and be no worse off.
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Post by mrclondon on Apr 20, 2016 16:21:26 GMT
Is the borrower not putting in £250k? Yes, but that is funding the cost of the move and legal fees rather than the land (see breakdown on page 4 of the info pack). Arguably whatever they spend on fencing the site is going to add value to the site, but the fact remains they are borrowing more than they are paying for the land (which by definition is current open market value in the absence of granted planning)
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investibod
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Post by investibod on Apr 20, 2016 16:30:01 GMT
Is the borrower not putting in £250k? Yes, but that is funding the cost of the move and legal fees rather than the land (see breakdown on page 4 of the info pack). Arguably whatever they spend on fencing the site is going to add value to the site, but the fact remains they are borrowing more than they are paying for the land (which by definition is current open market value in the absence of granted planning) I might go further and say that what they paid for the land is probably more than the current open market value in the absence of granted planning. If the borrowers can buy the site for this price, it suggests that they are willing to pay more than anybody else. So if the site needed to be sold on, there is a good chance that it would sell for less.
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Post by mrclondon on Apr 20, 2016 16:30:18 GMT
Avoided this one on TC. I guess F&P thought TC lenders wouldn't go for 10% on the first charge, so put up the second charge at 12%, it was fully underwritten at that, but I expect the underwriter got a better rate than the headline 12%. Yep, 10% feels a little on the light side. The mitigation is that after 3 years the LTV will decrease sharply, but that tends to pre-suppose planning is granted in which case the LTV will drop anyway as the site value will increase.
The second charge at 12% is appalling value.
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registerme
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Post by registerme on Apr 20, 2016 16:39:10 GMT
Avoided this one on TC. I guess F&P thought TC lenders wouldn't go for 10% on the first charge, so put up the second charge at 12%, it was fully underwritten at that, but I expect the underwriter got a better rate than the headline 12%. Yep, 10% feels a little on the light side. The mitigation is that after 3 years the LTV will decrease sharply, but that tends to pre-suppose planning is granted in which case the LTV will drop anyway as the site value will increase.
The second charge at 12% is appalling value.
Yeah, but effectively it also caps what MT can pay us for the first charge tranche. And I'm not sure 10% is enough of a reward for the risk.
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Post by Deleted on Apr 20, 2016 16:49:15 GMT
I'm still struggling with the idea that a transport company is missing out on profits because it does not have enough space, you would think you make most money by having the trucks on the road not securely locked up, but maybe security is the critical issue? I have an image of Ryanair with the aircrafts in the air not in a hanger.
What will they do with this land exactly?
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 20, 2016 17:00:36 GMT
I'm still struggling with the idea that a transport company is missing out on profits because it does not have enough space, you would think you make most money by having the trucks on the road not securely locked up, but maybe security is the critical issue? I have an image of Ryanair with the aircrafts in the air not in a hanger. What will they do with this land exactly? Parking initially. Self drive rentals & additional container storage according to the breakdown of where the extra money is coming from (end of info pack). Planning app is for 8 small units and a large 2 storey office which will take up a big chunk of the site. Have a look at the site plan on the planning application site
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