am
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Post by am on Jan 26, 2016 15:20:50 GMT
For anyone that cares looks like Tewkesbury has repaid early To make it on topic, it's being propped up by a bridging loan at 10%. £1,500,000 has been snaffled by FC IT.
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am
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Post by am on Jan 26, 2016 15:03:26 GMT
7241 and 7248 Tewkesbury repaid a few weeks early. As a bridging loan at 10% is being raised (3 tranches of £500,000 have been taken by FC IT) I expect that the remaining tranches will pay back imminently, but whether the uplift from getting the full months interest early outweighs the SM premiums I can't say.
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am
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Post by am on Jan 25, 2016 18:45:13 GMT
8266 Yorkshire (Driffield) 1 repaid today. The other 3 tranches are outstanding, but there were no competitive loan parts for sale when I looked. (Looks back in nostalgia to the days when a tranche repaid you could reinvest in discounted parts in another tranche.)
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am
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Post by am on Jan 24, 2016 22:35:19 GMT
This is a A-rated short term property loan, which was only 6 months. On the 21/1/2016 should have paid the final repayment plus interest. The final payment has not arrived and gone in 'retry'. Given the extremely short term, I wonder how is FC going to act. Will the company be asked to paid the extra interest? Even a 15 days/1 month delay is very important in such short term loans. As I understand, the problem is that the borrower had not, as of 22nd January, achieved agreement on detailed planning permission, and therefore couldn't refinance onto a development loan. My understanding is that additional interest is now payable on overrunning bridging/development loans. What isn't clear is how long it will take the borrower to refinance once the supposedly imminent agreement of planning permission occurs. FC could have said more about this. There's a thread in the other place, should anyone want to bend FC's ears.
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am
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Post by am on Jan 24, 2016 12:29:11 GMT
The older BTL loans were made when property prices were low, so market risk was relatively low. Now that property prices have risen equivalent loans are less appealing without lower LTVs, or higher rates. Also the older BTL loans were 50%LTV which at 6.5% looks better to me than 7% for 75%LTV. Although considering there's £385k of #173 fully taken up, I'm sure the upcoming crop will find a home. The pipeline has a BTL at 9.3% and 42.69% LTV. Bit close to London, but might be worth a look. (No documents as yet.)
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am
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Assetz Capital (AC)
113 Vote
Jan 24, 2016 11:17:44 GMT
Post by am on Jan 24, 2016 11:17:44 GMT
While it doesn't matter to me (I have a holding of less than 0.5p, via GBBA), there doesn't seem to have been any discussion on this.
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am
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Post by am on Jan 24, 2016 9:22:04 GMT
There were BTL's in the early days at 6.5%, but I thought they came with splashback? Yes, there were 6.5% BtLs. And IIRC some came with 3.5% cashback. I have seen 6.5% BtL loan parts appear on the SM and they do disappear, but sometimes they sit for quite a while before a buyer comes along. There's been a bit of Loan #173 (6.75%) for sale today, so we know there aren't any funded buying instructions for this loan left. That loan drew down on 3/Aug/15. That just happens to be the same day that the GBBA thread was started, so the loan probably was funded before the GBBA was released and therefore may not tell us much about how the current existence of the GBBA might affect the take-up of 7% BtL loans. I wouldn't have thought it would be easy for AC to find buyers for the £500+k of 7% loans on the Upcoming list very quickly, but perhaps speed isn't an issue. As someone else pointed out, AC could use the QAA to fund those loans at drawdown, which would produce some of the earnings they need for the QAA and help build up the QAA PF. AC then could drip feed the parts onto the SM as there was demand. As I've said in the past, inventing the QAA was a stroke of genius for AC! The older BTL loans were made when property prices were low, so market risk was relatively low. Now that property prices have risen equivalent loans are less appealing without lower LTVs, or higher rates.
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am
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Post by am on Jan 24, 2016 9:11:45 GMT
QAA could take a chunk if needed as 7% is well over it's coupon and would help with the PF. That said, I would assume that that QAA would only buy if AC knew that there was demand exceeding supply.... hmmm. Imagine *insert graphic of crystal ball here* *insert wavy hands here and mystic music here*.... Loan X comes up, at £75000 with a 7% rate. AC see that whilst not vastly popular, £95000 of targets are set across all MLIA's before it is drawn down. They issue 50k into the MLIA giving most people close to what was asked for and put the rest into QAA. In QAA they have 25k of a product and by maintaining a view of the MLIA targets, they know that they can shift all of it at will at any time. So it is quite happily paying 7% into MLIA, of which 3.75% goes into customers and 3.25% goes into the PF but they are at almost no liquidity risk because they can see the entire market. If the net buy orders ever drops below say 30k (there would be 45k at the start in this example) then they could sell off a some QAA loan parts to keep their exposure small and proportionate to the net demand. This QAA really is a clever idea of AC's. By design a large proportion of the QAA is held as cash for liquidity. This means that if the QAA is holding a loan paying 7% it's unlikely to produce a surplus to go into the provision fund, as the 3.25% margin goes into paying the interest on the cash portion of the QAA.
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am
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Funding Circle (FC)
19210
Jan 19, 2016 13:25:48 GMT
Post by am on Jan 19, 2016 13:25:48 GMT
Another stunning A+ (wafer thin margins, current ratio of ~0.3, NAV £150k in the black - but the nature of the business may allow a low current ratio).
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am
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Post by am on Jan 18, 2016 22:44:12 GMT
You missed Trust Buddy from the largest platform disappointment poll.
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am
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Post by am on Jan 18, 2016 20:09:00 GMT
It seems to me that LTV is not a good measure of the security of a development loan, for two reasons. Firstly the value of the security changes over the life of loan (generally upwards, but it can fall initially as demolition works are performed). Secondly the money is not (I understand) all released to the borrower at the start, but is handed over in stages as work progresses. (Does the balance sit in a client money account.) Consequently our exposure is nearly always less than is implied by a LTV calculated on the value of the security at the start of the project. FC often doesn't even raise all the cash at the start of the project, but raises additional tranches after a few months. Bridgeoak Property Finance is doing something similar, but quotes the initial LTV, and doesn't advance more money until the appreciation in value is sufficient to maintain that LTV.
The typical exit strategy for a development loan is the sale of the project. Since the commonest adverse outcomes are cost overruns (time overruns convert to cost overruns in the form of additional interest) or a failure to realise the projected sale price, LTGDV is an indication of the margin of error on the project, and how high the risk is. (Make adjustment for other factors - my rule of thumb is development loans in London and nearby areas, for high-end residential properties, and for commercial developments are more risky, as the valuations for such have higher betas.) The real problem is if a threshold is reached where it is uneconomic to continue the project.
The other common exit strategy is by refinance (e.g. onto a commercial mortgage or buy-to-let mortgage). The LTGDV correlates with how easy it will be to raise new finance to cover what we are owed.
Where LTGDV becomes less helpful is in the event of natural disaster (fire, flood, landslip, tornado, etc), or failure to complete the project. In the former case one hopes that the project is insured. If the project is not completed due to, for example, the death or illness of the developer, it is my understanding that lenders have the option to complete the project, which may be a better option that attempting to sell a partly completed project. A project may also fail to complete because it becomes uneconomic - either because of cost overruns or falling values.
I would like to see LTGDVs labelled as LTGDVs and not as LTVs.
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am
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Post by am on Jan 15, 2016 19:46:29 GMT
If you ignore that they've got the security certificates wrong, the new forum now appears to be working, at least to the point of bringing up the front page.
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am
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General P2x Discussion
2016 crash
Jan 14, 2016 10:43:13 GMT
Post by am on Jan 14, 2016 10:43:13 GMT
RS wants its provision fund in a liquid non-volatile asset class, so that the money is there when it's needed. While gold has been historically negatively correlated with most other asset classes, which is a plus point, it is also pretty volatile.
If I understand correctly a proportion of the provision fund's assets are in non-performing loans. Does anyone recall how deeply they are written down in the accounts?
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am
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General P2x Discussion
2016 crash
Jan 13, 2016 23:12:31 GMT
Post by am on Jan 13, 2016 23:12:31 GMT
What would be a safe alternative? Ultra-short dated gilts? Depending on the size of crash we're talking about, have you considered bottled water, tinned food and camping-gaz cylinders? Not (financially) liquid enough for the RS provision fund.
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am
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General P2x Discussion
2016 crash
Jan 13, 2016 22:46:37 GMT
Post by am on Jan 13, 2016 22:46:37 GMT
IMHO Ratesetter is the least likely to collapse in a crash - moderate interest rates, moderate risk. Others have Bot-tastic headline rates and may be less safe. Jack P Ratesetter are dependent on their provision fund which is a massive £17m. The last time I checked it was all in one bank. Not sure if the govt will be able to bail out the banks again, so the provision fund might drop to £75,000. What would be a safe alternative? Ultra-short dated gilts?
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