nick
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Post by nick on Feb 17, 2017 0:50:22 GMT
ablrateThe fact that the underlying lease is on a 12 month rolling contract is unquestionably material in assessing the credit risk of the loan and should have been clearly disclosed in the loan proposal. Whilst the risk appears to be mitigated by the sunk cost incurred by the lessee in initiating the lease, the early termination risk should have been flagged to us at the outset along with the mitigants. It is essential that all material information relating to a loan that would reasonably affect a lender's assessment of credit risk is fully disclosed, preferably prior to the opening of bidding, to help lenders to come to an informed decision. Failure to do so will lead to uncertainty over what other material omissions may exist and will quickly erode trust in the platform. I hope this will be reflected on in future loan proposals.
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stevio
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Post by stevio on Feb 17, 2017 7:12:23 GMT
I will pass this to the borrower for a response, but if you would like to cancel your bids then no problem we will deal with it. The asset coverage is great, the lessee is unlikely to quit after such expense up front and there are a multitude of guarantees. Great to see a quick and fair decision - particularly when another certain platform won't even engage with it's lenders, let alone make a change to sort out issues identified with the loans
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registerme
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Post by registerme on Feb 17, 2017 8:43:31 GMT
I'm an acknowledged fan of ablrate's but that doesn't mean they go without criticism where it's due. The thing that bothers me most about this is that these questions were entirely predictable. Hopefully the lesson has been learned (and one of the things I like about ablerate is that they do learn).
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Post by ablrate on Feb 17, 2017 8:48:07 GMT
We are updating the admin section with the answers from the borrower, however we would have a reasonable expectation to rely on the assumptions of industry professionals, who have never missed a payment on any project they are working with us on, and have been nothing but professional in all dealings with the company.
Here is the borrowers' answers:
Background and Analysis of Tenancy
The modular scheme is required as a result of a new project at PS which occupies space currently used by the administration and finance functions. These functions have now relocated into the modular unit scheme. The project is for a duration considerably in excess of 12-months (exact time frame unknown but the PS expansion project is stated to be over 15 years on their website).
Once the project does end, it is unlikely that the administration and finance functions will relocate back in the original building and there is currently no obvious alternative accommodation on site (hence the immediate requirement for the modular units).
This position has been discussed at length between PS and the company and this, coupled with the issues highlighted above, have led the directors to believe the tenancy will extend to 5+ years. Furthermore, both PS and the company have incurred significant up-front costs in order to prepare and install the modular scheme. This further supports the forecast actual duration of the tenancy.
There has been a 1 year up front rental payment and there is an ongoing contractual commitment of a rolling 12-months. So even if the contract was stopped tomorrow (which realistically isn't going to happen as it has just been started!) then CF will effectively receive 2 years worth of rental income as well as still owning the asset.
Credit Report
The credit report does not confirm a contractual lease of 5+ years and did not intend to do so. The wording used reflected the advice provided by the directors which in turn relied upon the above analysis and lenders are being offered a risk premium, hence a rate of 14%. This is along with asset coverage, an amortising loan, corporate guarantees and personal guarantees covering multiple times the amount loaned (i.e PGs that can actually be collected on, unlikev you may have experienced elsewhere).
The report does mention typical tenancies last for 3-5 years and often end up being considerably extended. The exact duration was not initially included or the agreement uploaded to the platform as the directors felt this would at this time potentially compromise negotiations in relation to other contracts yet to be agreed but at no point was there any intention of deception or malice.
The facts of the deal remain:
1. Asset cover in excess of the value of the debt
2. A high interest rate on an amortising loan to a highly experienced borrower with a strong covenant and multiple cross and personal guarantees.
3. Assignment of rental income from a blue chip covenant that will be an utter minimum of 2 years but realistically much, much higher.
For any investors who feel they put their money in under false pretenses (which we maintain is absolutely not the case) then we will cancel your bid if you contact us to do so before the loan closes. We have commitments to cover any such bids and do not want anyone who is unsure to be within the loan. Please contact us on admin@ablrate
Regards Ablrate
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Post by d_saver on Feb 17, 2017 9:46:23 GMT
Thank you Ablrate. Whilst I had questions, I didn't feel the info was misleading, more somewhat vague re the lease and the exact usage of the funds. But, this is what I have come to expect in my short time with p2p (and any other proposal I read). In comparison, Ablrate seem to provide far more info and are welcoming of queries, which does not seem to be the norm in p2p world. I have not seen a p2p loan offering with this much documentation prior on other platforms. Whilst it is always great to have as much info as possible up front, IMO, it is Ablrate (and others) jobs to bring decent loans to market and it is our task to review the offering, _ask questions_, and decide if we want to invest. The questions I asked came to mind immediately after briefly reviewing the docs. If anyone has questions, bring them up here so we can all discuss them and benefit from the collective, before the investment is made. I know there is a fear of missing out, but if I'm not sure and don't have enough facts, I'll let it go. There will always be another. I worked very hard for my cash - I'm not keen to let it go easily. I have some reservations about this one, but am invested. It may be a hard security to get value out of if it goes south, I'm not convinced of the current valuation, the company seems to have few assets after liabilities are accounted for, we have no audited up to date accounts, despite the turnover their historical margin seems tiny, now I see that rent has already been paid for up front for the first year. There's probably more, but I'm a skeptical guy But, balancing 14%, some big names and the fact it is an amortising loan which means our risk starts to decrease from day 1, I hope that by the time we get to the 2 year mark, security value will be reasonable and risks reduced. If we personally knew the lenders we might all be very much more comfortable to invest in such loans, but it is our job to pick holes in any offering and ask questions, hopefully without offending the helpful people running the platform. Thankfully in the case of Ablrate, they give us enough info to do this fairly easily and seem responsive to such queries.
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littonowl
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Post by littonowl on Feb 17, 2017 12:13:43 GMT
There has been a 1 year up front rental payment and there is an ongoing contractual commitment of a rolling 12-months. So even if the contract was stopped tomorrow (which realistically isn't going to happen as it has just been started!) then CF will effectively receive 2 years worth of rental income as well as still owning the asset. This was the paragraph (and in particular the highlighted parts) that eased my worries. I think its reasonable to expect that unless there were something materially wrong with the units themselves (unlikely having just been refurbished), then the contract which has just started is unlikely to be halted within the first year. And if I've understood it right, its a 12m notice period, then with the 1yr already paid upfront, we're likely to get a minimum of 3 years worth of rent. At £228K pa, we'd already be at £684K in rent (or over 90% of the loan value). An amortising loan too, meaning the risk will be significantly reduced by this point... I'm also still in, in fact have added a little this morning, as I always drip feed into ABL investments, whilst waiting to read and absorb comments and feedback on here...Once again this forum highlights what an excellent resource it is, especially when we have platform reps willing and able to communicate with us as effectively as ablrate do, however prickly some of the questions might get.
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Post by onion12 on Feb 17, 2017 12:25:31 GMT
I feel quite happy with this loan more of the same please
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Feb 17, 2017 15:13:39 GMT
Just hoovered up some of the last remaining percentage. My reluctance to bung in more was overcome by ABLrate's complete openness in responding to a perceived shortcoming in the Loan Particulars coupled with the speed with which the response/s occurred. I don't know what more you can ask for, so " Thanks ABLrate, Good Work, keep it up, you'll get more of my money."
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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 22, 2017 0:10:41 GMT
While we're at, might as well go for the hattrick 1000046, no charges registered on borrower F****** Properties. Surely should be a chattels mortgage or all assets debenture secured on the units at least?
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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 22, 2017 14:00:47 GMT
I thought I'd quickly go through the "C****** Group" and see what ABL charges are held and where... C****** GROUP HOLDINGS LIMITED > ABL Fixed Charge (26 October 2016)
So, no charges anywhere for the Film Studio Cabins (1000062), nor the Polo Club Modular Units (1000046). The School Modular Buildings & Ecoparc are held with a different party to the actual borrower (that shouldn't matter too much - but the duration it took to register the School Modular Buildings charge is strange). I've looked through all "AF" companies and can't find any other ABL Charge, so we are lacking the security it would seem (1000062 &1000046) ablrate - Could you explain the situation surrounding the security with (1000062 &1000046) please? The charge on the group is the charge on the Polo Club units. For some reason it shows under the Group but if you read the doc is against F****** Properties and the Group. Seems to be a two for the price of one filing The other question is why was the charge for the school units only registered Feb 17 when the loan has been running for at least a year. AIUI charges are supposed to be filed within 21 days to be valid or a court order is required.
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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 22, 2017 14:50:55 GMT
The charge on the group is the charge on the Polo Club units. For some reason it shows under the Group but if you read the doc is against F****** Properties and the Group. Seems to be a two for the price of one filing The other question is why was the charge for the school units only registered Feb 17 when the loan has been running for at least a year. AIUI charges are supposed to be filed within 21 days to be valid or a court order is required. Good spot - I'll alter my post to indicate this. However, I wonder where the Corporate Guarantee (which I would have thought would show up as a charge) is with regards to the other loans ? Never realised that ACF had their hands in this Nor did I but then possibly not surprising they started as an introducer and then became a borrower. CG arent charges so they wont be registered and this isnt a CG its a chattels mortgage on the specific assets. Extra security.
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stevio
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Post by stevio on Apr 22, 2017 18:11:32 GMT
I thought I'd quickly go through the "C****** Group" and see what ABL charges are held and where... C****** GROUP HOLDINGS LIMITED > ABL Fixed Charge (26 October 2016)
So, no charges anywhere for the Film Studio Cabins (1000062), nor the Polo Club Modular Units (1000046). The School Modular Buildings & Ecoparc are held with a different party to the actual borrower (that shouldn't matter too much - but the duration it took to register the School Modular Buildings charge is strange). I've looked through all "AF" companies and can't find any other ABL Charge, so we are lacking the security it would seem (1000062 &1000046) ablrate - Could you explain the situation surrounding the security with (1000062 &1000046) please? The charge on the group is the charge on the Polo Club units. For some reason it shows under the Group but if you read the doc is against F****** Properties and the Group. Seems to be a two for the price of one filing The other question is why was the charge for the school units only registered Feb 17 when the loan has been running for at least a year. AIUI charges are supposed to be filed within 21 days to be valid or a court order is required. Could it be just a while before the CH site is updated?
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registerme
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Post by registerme on Apr 22, 2017 20:26:25 GMT
It might be, but even if it is it's a fantastic example how this forum can work to everybody's benefit.
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ilmoro
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Post by ilmoro on Apr 22, 2017 21:12:38 GMT
7 months since launch is probably pushing it
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gt94sss2
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Post by gt94sss2 on Apr 27, 2017 18:24:33 GMT
ablrate I'm a tad confused with regards to this loan (10000620) and a connected borrowers loan (1000037). This loan has the borrower as "C****** MODULAR & PORTABLE BUILDINGS LIMITED", but there seems to be no charge registered at CH in relation to the film studios Modular Buildings. However, there is a charge for some Modular Buildings at a school, which would seem to relate to 1000037, which is a tad strange because the borrower for that loan is supposed to be "C****** CABIN HIRE LTD" (which has no charges favouring ABL). Can you explain the situation in regards to the above two loans please? ablrate Is there any clarification regarding the above or the subsequent posts?
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