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Post by charles on Oct 9, 2017 16:02:08 GMT
Dear P2P Forum, We are pleased to announce a new bond issue backed by a blended senior/mezzanine loan available for funding on Property Crowd. Our Luton bond offers an annualised yield of 13.10% over a 15-month term, via exposure to a senior and a mezzanine loan secured by a legal charge against a mixed use development asset in Luton city centre. Planning permission has been granted, allowing for the erection of a new five storey residential development, ground floor office space, parking and associated landscaping. As a reminder, the bonds available on Property Crowd are now ISA eligible, which means that you can invest your 2017/18 personal ISA allowance of £20,000 as well as transferring your existing Cash or Stocks & Shares ISA to a new Property Crowd ISA. There are no fees for ISA transfers and you can open a Property Crowd ISA on our platform in minutes by following the link here. Please also note that we have recently reduced our minimum investment size for ISA as well as Standard accounts to 10 bonds (approx. £820). As always, please consider your investment carefully, but act quickly. Happy investing! Kind regards, Charles (on behalf of the team @ Property Crowd) |
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gibmike
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What is a cynic? A man who knows the price of everything and the value of nothing.
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Post by gibmike on Oct 9, 2017 21:22:45 GMT
Hi charles, I take it the bond pays monthly? I have flicked through the docs and cannot see the details on payments? Regards, Mike |
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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 Oct 9, 2017 21:27:27 GMT
Hi charles , I take it the bond pays monthly? I have flicked through the docs and cannot see the details on payments? Regards, Mike Its not interest paying. Its a zero coupon bond so you buy at a discount to the face value and then get the full value on redemption. The purchase price depends on when you buy as it is calculated so if you hold to term you get the indicated return.
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gibmike
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What is a cynic? A man who knows the price of everything and the value of nothing.
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Post by gibmike on Oct 9, 2017 21:28:23 GMT
Thanks for that Charles,
I am reading the other docs now.
Funds coming over tomorrow.
Mike
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SteveT
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Post by SteveT on Oct 10, 2017 7:45:20 GMT
charles, given that the VR states the borrower bought the site for £3.2m in Feb 2017 (with planning consent already long in place, granted in Feb 2015), how can the "Current Open Market Value" possibly be £6.1m (or £5.795m for 180 days marketing) ?! The Senior loan of £3.2m itself appears to be 100% LTV against the (rather recent) purchase price, let alone the Mezz loan of £535k.
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Post by charles on Oct 10, 2017 10:31:38 GMT
charles , given that the VR states the borrower bought the site for £3.2m in Feb 2017 (with planning consent already long in place, granted in Feb 2015), how can the "Current Open Market Value" possibly be £6.1m (or £5.795m for 180 days marketing) ?! The Senior loan of £3.2m itself appears to be 100% LTV against the (rather recent) purchase price, let alone the Mezz loan of £535k. Hi SteveT, Thank you for the question, and a valid one indeed. My understanding is that the borrower acquired the site from a close personal contact at a price substantially below market value at the time. The previous owner was diagnosed with a serious illness and required an immediate sale (which our borrower was able to provide) in order to return to his home country for medical care. Kind regards, Charles
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SteveT
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Post by SteveT on Oct 10, 2017 13:24:58 GMT
If true, that’s one hell of a discount, especially since a sizeable chunk of the purchase price hasn’t even been paid over yet. How has the Valuer arrived at the current open market value? I can see nothing to justify it, unless it’s anongst the missing Appendices.
Can I also ask why you’re blending Senior debt with Mezz debt in this bond? The Mezz ranks behind even the (unquantified) Development finance so has to be considered highly risky if the scheme hit any sort of problem. A potential 19% write-off more than wipes out the return on the Senior portion.
Why not 2 separate bonds, a Senior one at, say, 11% and a Mezz one at 20%?
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Post by charles on Oct 10, 2017 14:27:35 GMT
If true, that’s one hell of a discount, especially since a sizeable chunk of the purchase price hasn’t even been paid over yet. How has the Valuer arrived at the current open market value? I can see nothing to justify it, unless it’s anongst the missing Appendices. Can I also ask why you’re blending Senior debt with Mezz debt in this bond? The Mezz ranks behind even the (unquantified) Development finance so has to be considered highly risky if the scheme hit any sort of problem. A potential 19% write-off more than wipes out the return on the Senior portion. Why not 2 separate bonds, a Senior one at, say, 11% and a Mezz one at 20%? Hi SteveT, I can't comment on the discount, but obviously, it is a free market and as I've already highlighted, the circumstances surrounding the sale may have contributed to it somewhat. As for the open market value, I would draw your attention to pages 9 and 10 of the Valuation Report, which summarise the key results from the Argus model and go on to explain how they arrive at the GBP 6.1m market valuation. Some of the appendices have been left out as they contain sensitive information, but I hope you find the summarised version useful for your purposes. As for the blending, we would have offered two separate bonds if the mezz was larger and thus justified the additional costs of doing so. As for your concerns re: it ranking behind the development finance, I would remind everyone that this facility is disbursed in tranches as the development hits certain milestones (which one would think translates to a higher valuation), so I would politely disagree with the suggestion that the mezz gets riskier as the development finance kicks in. Kind regards, Charles
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SteveT
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Post by SteveT on Oct 10, 2017 15:08:53 GMT
As for the blending, we would have offered two separate bonds if the mezz was larger and thus justified the additional costs of doing so. As for your concerns re: it ranking behind the development finance, I would remind everyone that this facility is disbursed in tranches as the development hits certain milestones (which one would think translates to a higher valuation), so I would politely disagree with the suggestion that the mezz gets riskier as the development finance kicks in.I think you've misunderstood my point. If the development were to hit issues, run out of funding and end up having to be sold unfinished then it's the Mezz finance that takes the first write-off, ranking behind both the Senior debt and the Dev finance. It's not so far-fetched; there are various examples on other platforms where exactly this has happened.
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Post by charles on Oct 16, 2017 13:47:05 GMT
Hi all,
Just a quick update to say thank you for all the support - we've raised over GBP200k in under a week, which is a very decent clip.
And for those who haven't yet invested, a reminder that the yield on this bond is 13.1% annualised, which is the highest we have offered to date on our platform.
As always, please feel free to reach out to me via PM should you have any queries I may be able to help with.
Kind regards,
Charles
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rs
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Post by rs on Oct 17, 2017 17:29:52 GMT
Hi all, Just a quick update to say thank you for all the support - we've raised over GBP200k in under a week, which is a very decent clip. And for those who haven't yet invested, a reminder that the yield on this bond is 13.1% annualised, which is the highest we have offered to date on our platform. As always, please feel free to reach out to me via PM should you have any queries I may be able to help with. Kind regards, Charles Hi Charles I'm not entirely sure over GBP200K in under a week is decent considering that triple the GBP200K amount can easily be filled in under 2 days on other p2p websites. If the minimum amount can be decreased I think more people will invest but it does depend on the loan being offered as well.
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Post by shyinvestor on Nov 10, 2017 21:55:33 GMT
Is anything known about the developer for this Luton site? Property prices in Luton have been rising and it would be useful to some insight into the past record of those concerned, if it could be posted without causing problems with the moderator.
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Post by shyinvestor on Nov 11, 2017 18:50:39 GMT
In view of the overwhelming response to my question about the developer, perhaps I should ask a different question. Does the fact of the developing company being registered in the British Virgin Islands cause lenders to stop and think? Is it a problem?
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Post by peerlessperil on Nov 13, 2017 9:25:43 GMT
I don't think there is that much wrong with the valuation, per se, in that the valuer has done precisely what he was instructed to do....which is to provide a 180 day market value subject to confirmation of the methodology used. They have even declared the recent purchase price in the 2nd paragraph of the Intro - if only we always saw this. The valuer is commendably guarded about the proposal to add a further floor - pointing out the s106 implications.
The 180 day value is effectively a variation on the red book valuation - i.e. worked backwards from the GDV with an assumed level of developer profit and the anticipated build cost.
The "existing use" value would of course be in the region of the purchase price (and probably less, given £600k of the purchase consideration has been deferred till the project completes).
I don't like the proposal to re-open planning discussions with the council to add a further floor as this could easily delay things.
I am also nervous about the proposal to use 2 contractors - one to build the base slab and ground floor, then a second contractor to build the upper floors using timber frames. Maybe someone better informed than I can say this often happens and goes smoothly, but I can just see so many ways in which it could go wrong?
Is this any worse than the 13% loans on Lendy/FS? Probably better in some ways, but do I want my money tied up in a development loan that could run to Jan 2019 + 3 months, so April 2019, with a chunk very heavily subordinated?
We may be in a very different world by then, so this is a bet on the economic cycle as well as a development loan.
Pass.
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rs
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Post by rs on May 2, 2019 11:50:57 GMT
I don't think there is that much wrong with the valuation, per se, in that the valuer has done precisely what he was instructed to do....which is to provide a 180 day market value subject to confirmation of the methodology used. They have even declared the recent purchase price in the 2nd paragraph of the Intro - if only we always saw this. The valuer is commendably guarded about the proposal to add a further floor - pointing out the s106 implications. The 180 day value is effectively a variation on the red book valuation - i.e. worked backwards from the GDV with an assumed level of developer profit and the anticipated build cost. The "existing use" value would of course be in the region of the purchase price (and probably less, given £600k of the purchase consideration has been deferred till the project completes). I don't like the proposal to re-open planning discussions with the council to add a further floor as this could easily delay things. I am also nervous about the proposal to use 2 contractors - one to build the base slab and ground floor, then a second contractor to build the upper floors using timber frames. Maybe someone better informed than I can say this often happens and goes smoothly, but I can just see so many ways in which it could go wrong? Is this any worse than the 13% loans on Lendy/FS? Probably better in some ways, but do I want my money tied up in a development loan that could run to Jan 2019 + 3 months, so April 2019, with a chunk very heavily subordinated? We may be in a very different world by then, so this is a bet on the economic cycle as well as a development loan. Pass.
Paid out yesterday in full.
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