macq
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Post by macq on Jun 5, 2017 15:39:42 GMT
You are right sg. Ablrate has just quoted the borrower saying that the site is worth £995, and I've offered to lend more than that myself. so you have bought it for £995 and cash back and instant return its a good deal
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Post by epicurean on Jun 5, 2017 22:53:29 GMT
- From what I can work out this is a loan to APFL as an operating business and as their business happens to be making loans the security they are offering and repayment are related to loans, but this is not a true loan-on-loan wholesale lending arrangement. I've no doubt this complies with the letter of the relevant regulations but I'm dubious about whether it complies with the spirit of them. - I would want to know the full details of the underlying Sig*****e loan as this is claimed to be the source of repayment (and as lenders seem to be effectively relying on APFL's underwriting skills to repay their loan) - The valuation assumes that planning can be successfully sought for a new development (of what?). If planning permission is not received the value of the land is not £995k. I imagine the value today for the land without planning permission (and with 3 derelict buildings yet to be demolished) is far lower than £995k which makes the 75% LTV quoted misleading in my view. I note another lender has agreed to refinance the Sig*****e loan only on the condition of planning permission being successfully received. - The valuer also assumes no contamination at the site which is a bold assumption to make given history of a fire and their later comments about asbestos risk (the valuer recommends appropriate investigations are made before completing a transaction). - The valuer has also not seen a report on title presumably because one doesn't exist so there could be other charges on the property or the borrower may not even own the property. Again the valuer recommends one should be completed. - Land is normally valued on a residual basis (rather than comparable). This is where the valuer solves backwards from GDV to work out what a prospective developer can afford to pay for the land and still make an acceptable profit (typically c.20% on cost). The current comparables quoted are shockingly bad. I have no idea how the valuer has come to £995k. - I'd echo the good points made around interconnected loans. It looks like a complicated question to answer and I'd expect to see a note from a lawyer acting for Ablrate explaining exactly how enforcement would work. I have other relatively minor points but the key questions for me are what is the value of the land today and what exactly is the arrangement with APFL. We will get to the questions here and have answers shortly - however one sticks out: "The valuation assumes that planning can be successfully sought for a new development (of what?) ( as in the doc HMO (Houses of Multiple Occupancy. I.e Flats - page 3) . If planning permission is not received the value of the land is not £995k. I imagine the value today for the land without planning permission (and with 3 derelict buildings yet to be demolished) is far lower than £995k which makes the 75% LTV quoted misleading in my view. I note another lender has agreed to refinance the Sig*****e loan only on the condition of planning permission being successfully received. Borrower: "The £995 is what it is worth now, not GDV etc. Hence the valuation. If GDV was quoted, that is what will have been detailed in the doc" Thanks but my question was more around what kind of development the valuer thought he was valuing as it does not state it in the report. I'm only interested in the value from a properly conducted independent valuation rather than what the borrower states but perhaps others take a different view. The only planning permission I can see on Birmingham Council's website for this site is for a B&B that was withdrawn. I can understand why there might be some sensitivity in sharing a valuer's opinion of the land value with assumptions detailed around GDV/construction cost (although don't think it's a big issue). But at the same time the borrower is asking for other people's money on the basis of the land value. It seems a low expectation to want to know what the land is worth and why. If it's a case of just trusting the borrower then do away with the pretence of an independent valuation which is likely to give people a misplaced sense of comfort.
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blender
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Post by blender on Jun 6, 2017 7:16:10 GMT
Very strong words from epicurean which cannot be left unanswered. The matter of the outline planning consent must be a matter of fact and public record, not commercially sensitive. I have not looked for the outline consent because I trust the Ablrate would not have the following in the borrowing proposal p.3. (which Ablrate has quoted from here) without having checked the facts: 'The Company has obtained outline planning consent to rebuild and develop the properties to provide HMO accommodation and a detailed planning application has recently been submitted.' It should be a simple matter for Ablrate to provide a link to the consent documentation, and even to the current application. I trust Ablrate to use high standards of diligence in checking these loan applications, so that I do not have to trust or check the borrower's statements of the facts.
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SteveT
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Post by SteveT on Jun 6, 2017 7:38:26 GMT
The planning history on both properties lists various past applications and consents for B&B / HMO use (presumably prior to them burning down). Given their current state and the residential nature of the street, IMO there's little doubt the local authority will approve some sort of reasonable scheme for their demolition and redevelopment.
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blender
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Post by blender on Jun 6, 2017 8:05:44 GMT
The planning history on both properties lists various past applications and consents for B&B / HMO use (presumably prior to them burning down). Given their current state and the residential nature of the street, IMO there's little doubt the local authority will approve some sort of reasonable scheme for their demolition and redevelopment. Yes, but that is not the point. We need to identify the outline planning consent obtained by 'The Company'.
ps. I find that these properties were fire damaged in May 2011, and were then partially demolished by Birmingham City Council.
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shimself
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Post by shimself on Jun 7, 2017 12:11:30 GMT
... On a local knowledge level, living in Birmingham, I know of the area where the properties are located. The road is a busy commuter road to the South of Birmingham. Locally there is Queen Elizabeth hospital which has a large staffing level. It is one of the teaching hospitals for many specialist functions and contains wards specifically for armed forces injury rehab. Birmingham University (Russell group) is a little further out along Hagley Road. Other colleges and ex polytechs are local as well. The nurse training university is within a short walk also. I think you are referring to Bristol Rd
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shimself
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Post by shimself on Jun 7, 2017 12:23:14 GMT
... My comfort is my belief that our interest and Ablrate's are bound together... How so?
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shimself
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Post by shimself on Jun 7, 2017 12:50:17 GMT
The two properties combined were on sale for 775K in Dec 2015 according to this <link redacted> sorry, the local paper. Some way under the 995 valuation
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blender
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Post by blender on Jun 7, 2017 13:30:53 GMT
Without wishing to labour this point, with only 36 live loans, and two small ones defaulted, both Ablrate and the lenders need repayments to be maintained.
I cannot find the 'the Company's' outline consent for this development on the planning website, and the valuation does not mention even the fact of it. I would like proof that the outline planning consent has been granted, please.
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macq
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Post by macq on Jun 7, 2017 13:35:58 GMT
does seem to have gone quite on the promised update hence a bit of concern
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blender
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Post by blender on Jun 7, 2017 13:54:03 GMT
The two properties combined were on sale for 775K in Dec 2015 according to this <link redacted> sorry, the local paper. Some way under the 995 valuation There was talk of a ransom strip, which may be additional and if so would increase value.
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stevio
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Post by stevio on Jun 7, 2017 15:59:19 GMT
The two properties combined were on sale for 775K in Dec 2015 according to this <link redacted> sorry, the local paper. Some way under the 995 valuation There was talk of a ransom strip, which may be additional and if so would increase value. Ok, I'll ask, whats a ransom strip?
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macq
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Post by macq on Jun 7, 2017 16:03:42 GMT
think its when you get divorced and lose the shirt off your back
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SteveT
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Post by SteveT on Jun 7, 2017 16:04:32 GMT
A narrow strip sometimes is retained when selling land that lies beyond it, preventing the purchaser (or subsequent owners) from creating an access across it without separate consent / payment.
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blender
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Post by blender on Jun 7, 2017 16:49:25 GMT
Yes, sorry and thanks stevet. It is in the valuation as a strip adjacent to the higher numbered property and giving rear access with ten more parking places. They obviously paid a high price for it and it would increase the value of the site.
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