cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Jun 23, 2016 13:54:47 GMT
This Loan Rolled into DFL009
| Loan Amount | : | £487,500
| | Security Value | : | £750,000
| | SS Indicated LTV | : | 65%
| | 90 Day Market Valuation | : | £650,000
| | LTV Based on 90 day Market Valuation | : | 75% |
PLEASE NOTE : This post (and all my DD posts) are no longer being updated by myself (besides the basic loan status)
Observations from the valuation report & other remarks
Borrower
- SS say that the borrower is a Single Ltd company borrower comprising a local syndicate of investors who have experience in completing similar projects in the area.
According to the valuation report, the applicant (presumably our borrower) is "N***** 10 The A**** LLP". Information from companies house, shows it is a new company (incorporated 1 May 2016), which has three LTD companies as directors. All three of these companies are named after the directors who all live local to the property, which backs up SS statement that this is a local syndicate of investors.
- SS changed their minds about who the borrower is (not sure when) after the loan went live, and it seems that our borrower is in fact, W******** A**** PROJECT LTD. A quick look at companies house shows this company was incorporated on 20 June 2016 (4 days before drawdown of the loan), so very little information about them online. The directors involved were also involved in the previous company SS indicated as borrowers.
- The bridging loan is to purchase the property quickly for a discount whilst the borrower arranges development finance to complete the refurb/works. SS may consider this proposal if it passes our credit committee approval.
Security
- This is a bridging loan and no work will be undertaken during the term of this loan unless SS agree to it.
- The property (which is freehold) is a former semi-detached hotel to be converted into 20 serviced living apartments each having a living room with kitchen and a bathroom with WC.
- The property currently falls within C1 class (currently a hotel). The planned serviced living apartments (basically a hostel) would also fall within C1 class, so no PP required.
- Subject to minor internal-only reconfiguration, the borrower intends to create 20 flats each with a living room and kitchen area and a separate shower room with W/C. The interior will be upgraded and redecorated in an inviting modern style with modern features but retaining some of the traditional elements of the building
- The valuation reports says that it would expect there to be fairly strong tenant demand. The applicant intends to sell off the units to investors wishing to see a net return in the order of 7%.
- At the time of the inspection, the premises appeared to be in a satisfactory condition and state of repair having regard to the age and construction. There were no defects noted which would impact on our opinion of value other than the poor decorations and removal of some fixtures which would likely have been replaced during the course of refurbishment.
- The valuation report indicates that the borrower has agreed a purchase price of £600,000. If that was an indication of the valuation of this security, the LTV would be 81%.
Exit Strategy
- The borrower will arrange development finance from another lender or SS will offer finance.
| Code Number Assigned | : | 23/06/2016 | | Loan went live @ | : | 24/06/2016 | | Allocation | : | ? | Amount of Investors @ Live
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| 770 |
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Post by grodecki on Jun 23, 2016 14:00:32 GMT
Very close to home for me.
Property in Norfolk in desirable areas (and Wymondham in general is one of those) is currently very much on the up and is selling quickly. I think this is a pretty decent loan on a 'first look' basis.
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Post by geraldine1210 on Jun 23, 2016 14:01:56 GMT
Look at the article in the eastern daily press about the hotel group.
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Post by chielamangus on Jun 23, 2016 14:08:27 GMT
This is the type of development proposal that makes me wonder. 20 flats to be created less than 30 sq. metres each - smaller than my kitchen - and this is a small country town, not London. I used to be able to rent larger flats as a student. Truly, things have changed. Too many people crowding in to too small an area. Dunno about following Europe, we should be looking at the Japanese model.
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moist
Member of DD Central
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Post by moist on Jun 23, 2016 14:19:54 GMT
trip advisor worth a read too!
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Post by geraldine1210 on Jun 23, 2016 14:22:53 GMT
Quite a lot of articles about the hotel group.
One article says that the w******** h**** had recently been converted into 20 units.
I thought this conversion hadn't started yet.
Will not be touching this loan.
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cooling_dude
Bye Bye's for the PPI
Posts: 2,853
Likes: 4,298
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Post by cooling_dude on Jun 23, 2016 14:27:52 GMT
Quite a lot of articles about the hotel group. One article says that the w******* h**** had recently been converted into 20 units. I thought this conversion hadn't started yet. There is no reason to look into the hotel group (apart from curiosity), because they are not our borrower. Our borrower is a group of locals looking to turn the hotel into residential flats. Seems the hotel was poorly run and attracted the wrong sort of clientele, so locals are looking to solve the situation by getting rid of the hotel.
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Post by ladywhitenap on Jun 23, 2016 14:33:41 GMT
Just to be picky CD (sorry) the go live date is 24th not 23rd- today.
Cheers
LW
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cooling_dude
Bye Bye's for the PPI
Posts: 2,853
Likes: 4,298
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Post by cooling_dude on Jun 23, 2016 14:34:29 GMT
Just to be picky CD (sorry) the go live date is 24th not 23rd- today. Cheers LW Done 
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min
Member of DD Central
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Post by min on Jun 23, 2016 14:37:37 GMT
Quite a lot of articles about the hotel group. One article says that the w******* h**** had recently been converted into 20 units. I thought this conversion hadn't started yet. Will not be touching this loan. A local newspaper getting it's facts wrong. Whatever Next? 😊
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Post by geraldine1210 on Jun 23, 2016 14:41:34 GMT
Quite a lot of articles about the hotel group. One article says that the w******** h***** had recently been converted into 20 units. I thought this conversion hadn't started yet. There is no reason to look into the hotel group (apart from curiosity), because they are not our borrower. Our borrower is a group of locals looking to turn the hotel into residential flats. Seems the hotel was poorly run and attracted the wrong sort of clientele, so locals are looking to solve the situation by getting rid of the hotel. Bearing in mind how tiny the flatlets are, I wonder whether the clientele will improve.
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Post by geraldine1210 on Jun 23, 2016 14:43:38 GMT
Quite a lot of articles about the hotel group. One article says that the w******* h**** had recently been converted into 20 units. I thought this conversion hadn't started yet. Will not be touching this loan. A local newspaper getting it's facts wrong. Whatever Next? 😊 In fairness quite a few negative articles about the group. Although as CD says, they are not involved in redeveloping the property.
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oldgrumpy
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Post by oldgrumpy on Jun 23, 2016 14:46:09 GMT
I would like to be assured that the owner of the hotel group Mr T*** B******ham (or any of his "associates") is not one of the syndicate of "local people" trying to buy the hotel.
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ben
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Post by ben on Jun 23, 2016 14:46:48 GMT
Not quite sure I would trust the valuers to much as they say that the borrower has agreed to purchase it for less then what they say the 90 day quick fire sale should be. So even the 90 day value is a work of fiction. If you basing it on the 90 day value I would suggest it would be less then the £600,000 probably closer to the lending amount.
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bloodycat
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Post by bloodycat on Jun 23, 2016 14:55:26 GMT
I don't like the look of the proposed development and would probably steer clear of any future DFL.
At the moment the concern is whether the current valuation is realistic for a PBL. Unsurprisingly the open market valuation has been set as the current asking price, is this realistic?
If the quick finance required to secure the property because there are other serious interested parties then it possibly is a reasonable valuation.
If however, as I suspect may be the case, the PBL is for the full purchase price on condition of a quick sale as the vendor needs to liquidate their assets then I suspect the 90 day valuation might be rather optimistic.
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