j
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Penguins are very misunderstood!
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Post by j on Apr 1, 2014 16:02:00 GMT
I'm not that keen on bridging loans. I think AC in general is too dependent on the property market, so I consider wind farms at 10% to be a welcome diversification. They should be low risk as well. The main issue with Burnley and Cumbria is the balance sheet of the developer. I think this is only a short term concern, because SPVs are used and everything to do with operations will be contracted out, but it's still a slight worry. Presumably that's why we get the opportunity to lend, instead of it going to a mainstream lender. I'm all for diversification but, looking at the bigger picture do I want to commit funds into these loans & wait for draw down to happen when I can use funds in AM. Once they do become available on AM, then possibly a few units might diversify the portfolio a bit.
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j
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Penguins are very misunderstood!
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Post by j on Apr 1, 2014 16:04:12 GMT
Apart from diversification, I do not see much more appeal in this loan or its sister loan in Cumbria. I feel there's better value & higher return even in the short-term bridging loans. Am I missing something between the lines or is it just my misguided judgement?! You may already have considered this, but these loans are longer term and therefore might have the advantage of not needing the constant attention to reinvestment that a portfolio of short-term bridging loans requires. Also, longer loans with payments that are greater than just interest-only have the advantage that if everything else stays constant the LTV will improve over the term of the loan. Of course, it's rare that "everything else stays constant", so longer-term loans could be viewed as having more time for the borrower to run into a problem. I'm intending to pick of a bit of each of the wind turbines when/if they appear on the AM at a time when I have funds available, but that's mostly because I'm still trying to balance and diversify my AC portfolio. The longer a loan is I suppose, the more chance of it getting into trouble. Having said that, if one follows that mantra all the time, we'll all just stick to bridging loans! I will probably pick some units on AM if & when they do become available, simply to diversify across many loans & spread the risk
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j
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Penguins are very misunderstood!
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Post by j on Apr 1, 2014 16:06:45 GMT
I agree with Pikestaff.I think we may have become a little spoilt with recent returns in excess of 10%.However, a solid return from companies such as this with as certain an income stream as we're likely to get should be an intrinsic element of a balanced portfolio. I probably didn't make my point very clear. You are right, we can feel currently spoilt with the majority of loans @ around 12%. Diversification is an important aspect across a number of rates & business sectors
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Post by jevans4949 on Apr 1, 2014 22:56:31 GMT
With regard to the pros and cons of bridging loans, given the delays in getting these "urgent" loans set up, it doesn't give confidence that the borrowers will always have their ducks in a row when the loan falls due for repayment. Although this is not too worrying provided that interest is still coming in and the loan is on course to be repaid reasonably soon.
The disadvantage of bridging loans under the Assetz system is that when the loan is repaid, you then have a delay until your next loan is drawn down.
What might be concerning with the longer term loans (say 5 years) is where these are based on an even longer repayment profile (say 20 years). The question would be whether the borrower is able to re-negotiate a new loan in what may be a very different economic climate. Although Assetz would hopefully be willing to renew the loan if banks were making things difficult at the time.
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mikes1531
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Post by mikes1531 on Apr 2, 2014 1:00:25 GMT
The disadvantage of bridging loans under the Assetz system is that when the loan is repaid, you then have a delay until your next loan is drawn down. Unless, of course, the situation we've had for the last month -- whereby a goodly number of underwritten loan parts are available on the AM all the time -- becomes the norm. If that's the case, reinvestment without delay would be possible. What might be concerning with the longer term loans (say 5 years) is where these are based on an even longer repayment profile (say 20 years). The question would be whether the borrower is able to re-negotiate a new loan in what may be a very different economic climate. Although Assetz would hopefully be willing to renew the loan if banks were making things difficult at the time. I've never been very enthusiastic about interest-only loans, or 5-year loans with 20-year profiles. The huge bullet payment at the end means refinancing is very likely to be required and that may be easier said than done when the time comes. Having said that though, that really ought to be the borrower's problem rather than ours as lenders. But it does also depend heavily on the security proving to be adequate some number of years in the future, and that's always a risk we take. And I'd really rather not see AC have to liquidate the security in order to cover the bullet payment, because it means that the borrower's project has failed, and that's really bad news for them and all the others that will be affected by the failure -- employees, suppliers, customers, HMRC, etc., etc.
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j
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Penguins are very misunderstood!
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Post by j on Apr 2, 2014 6:42:23 GMT
At the moment, there's ample availability of units on AM to make bridging loans a bit more attractive than they were a few months ago as they pay immediately. They are short term though.
Long term loans, if they finish their term in full, which most will probably not as they'll try a cheaper refinance along the line, are supposed to pay out more over the term loan. There's more chance of things going wrong also due to their length.
Both types have pros & cons & I think our main point of learning from this is to diversify into various loan types. I must admit I was starting to veer away from longer & lower rate loans but am starting to pick some units again when they're available on AM & also the current live loans.
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mikes1531
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Post by mikes1531 on Apr 2, 2014 15:42:36 GMT
Both types have pros & cons & I think our main point of learning from this is to diversify into various loan types. I must admit I was starting to veer away from longer & lower rate loans but am starting to pick some units again when they're available on AM & also the current live loans. I've come to a similar conclusion. I'm trying to diversify my portfolio by selling off some parts that I'm overweight in and picking up some parts of more recent loans. That should result in a more even stream of income and maturities. I look forward to the time when features are added to the AC My Account section that will allow me to see those without having to go through the increasing number of loans in my portfolio -- one at a time -- to extract the relevant data.
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star dust
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Post by star dust on Nov 18, 2014 18:46:14 GMT
Latest payment was due Sunday (16th), but still not posted yet. Does this mean that it is officially late, or just stuck in the system somewhere? Anyone know anything about this? Hope it's nought to do with the new Green Income Account  . |
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mikes1531
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Post by mikes1531 on Nov 18, 2014 20:34:49 GMT
Latest payment was due Sunday (16th), but still not posted yet. Does this mean that it is officially late, or just stuck in the system somewhere? Anyone know anything about this? I don't. A question has been raised in the loan's Q&A, so with any luck we'll have an answer tomorrow.
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star dust
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Post by star dust on Nov 18, 2014 20:45:31 GMT
Latest payment was due Sunday (16th), but still not posted yet. Does this mean that it is officially late, or just stuck in the system somewhere? Anyone know anything about this? I don't. A question has been raised in the loan's Q&A, so with any luck we'll have an answer tomorrow. Thanks mikes1531, there were no Qs asked when I posted, so I'll keep an eye out.
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star dust
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Post by star dust on Nov 19, 2014 16:52:44 GMT
AC reply to Q&A, apparently chasing borrower for payment, which hasn't been received yet. I presume this means the loan can't be traded at the moment - weren't loans supposed to be flagged as such on the new website? Come to think of it none of them are - perhaps I'm miss-remembering.
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Post by pepperpot on Nov 19, 2014 17:16:57 GMT
AC reply to Q&A, apparently chasing borrower for payment, which hasn't been received yet. I presume this means the loan can't be traded at the moment - weren't loans supposed to be flagged as such on the new website? Come to think of it none of them are - perhaps I'm miss-remembering. Looks to be un-tradeable; 10 mins ago I reduced my target by £1 and the 'for sale' amount would normally appear on the loan page as available for investment (not in a list, where your own parts aren't visible). I think 'suspended from trade' loans getting a flag is in the pipeline, it's just a long pipe!
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Post by davidricketts1 on Nov 21, 2014 9:23:22 GMT
Payment was received yesterday evening and has been made this morning.
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bigfoot12
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Post by bigfoot12 on Nov 21, 2014 9:33:42 GMT
Thank you.
Given how many turbines they have and given that recently they have been consistently late with most payments, is it worth insisting they automate any new loans? (And as a sign of goodwill automate the current ones too.)
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Post by davidricketts1 on Nov 21, 2014 10:23:24 GMT
Thank you. Given how many turbines they have and given that recently they have been consistently late with most payments, is it worth insisting they automate any new loans? (And as a sign of goodwill automate the current ones too.) Borrower has already had this pointed out to him this morning.
Indeed, I've even offered to help him with it.
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