SteveT
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Post by SteveT on Jun 11, 2018 14:07:14 GMT
I've just clarified the update via Live Chat:
Q: Can you please clarify what is meant by the update added to various Lytham St Annes tranches an hour ago: "Funds have been raised to cover the interest on this loan. However, loans in prior tranches must be renewed first." Does this mean that tranches will be renewed in ranking priority order, starting with 1st Facility - 1st Tranche, as would be expected, or in order of how many days overdue each tranche now is?
A: Yes the loans will be renewed in ranking priority order for all prior tranches
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steve11523
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Post by steve11523 on Jun 11, 2018 14:09:51 GMT
If the renewals are processed in order of the expected end dates then there are three loans to be renewed (two from the third facility and one from the fourth facility) before any of the first facility loans will be renewed. The total of these three loans is £650,000 which means that the £100,000 raised by the first facility of the fifth tranche may be exhausted before the first facility loans are renewed.
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steve11523
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Post by steve11523 on Jun 11, 2018 14:11:31 GMT
My comment crossed with SteveT. So, first facility will be renewed first?
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SteveT
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Post by SteveT on Jun 11, 2018 14:13:50 GMT
My comment crossed with SteveT. So, first facility will be renewed first? According to fundingsecure 's Live Chat response, yes. And that's the natural sequence you would expect when multiple facilities & tranches are overdue and some rank ahead of others. It also makes commercial sense, since the 1st Facility loans will fill rather faster / have higher levels of reinvestment than the junior ranking facilities !!
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r00lish67
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Post by r00lish67 on Jun 11, 2018 15:10:13 GMT
My comment crossed with SteveT. So, first facility will be renewed first? According to fundingsecure 's Live Chat response, yes. And that's the natural sequence you would expect when multiple facilities & tranches are overdue and some rank ahead of others. It also makes commercial sense, since the 1st Facility loans will fill rather faster / have higher levels of reinvestment than the junior ranking facilities !! Agreed. Apologies I was incorrect in my post above, sorry for multiplying FS confusion. Still, with such a golden asset, what's the difference. It's going to make a lovely set of apartments/surface car park (delete as appropriate)...How did we get to 5 facilities, again?
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sqh
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Post by sqh on Jun 15, 2018 9:58:03 GMT
I've just clarified the update via Live Chat: Q: Can you please clarify what is meant by the update added to various Lytham St Annes tranches an hour ago: " Funds have been raised to cover the interest on this loan. However, loans in prior tranches must be renewed first." Does this mean that tranches will be renewed in ranking priority order, starting with 1st Facility - 1st Tranche, as would be expected, or in order of how many days overdue each tranche now is? A: Yes the loans will be renewed in ranking priority order for all prior tranchesThe person on live chat may have misunderstood the question. The update on 1st Facility - 1st Tranche says "Funds have been raised to cover the interest on this loan. However, loans in prior tranches must be renewed first.". The update on the oldest outstanding tranche (3rd facility - 1st Tranche) doesn't have the same update, implying that it will get the interest paid first.
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SteveT
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Post by SteveT on Jun 26, 2018 7:51:14 GMT
I've just clarified the update via Live Chat: Q: Can you please clarify what is meant by the update added to various Lytham St Annes tranches an hour ago: " Funds have been raised to cover the interest on this loan. However, loans in prior tranches must be renewed first." Does this mean that tranches will be renewed in ranking priority order, starting with 1st Facility - 1st Tranche, as would be expected, or in order of how many days overdue each tranche now is? A: Yes the loans will be renewed in ranking priority order for all prior tranchesThe person on live chat may have misunderstood the question. The update on 1st Facility - 1st Tranche says "Funds have been raised to cover the interest on this loan. However, loans in prior tranches must be renewed first.". The update on the oldest outstanding tranche (3rd facility - 1st Tranche) doesn't have the same update, implying that it will get the interest paid first. It's hard to work out why my question " Does this mean that tranches will be renewed in ranking priority order, starting with 1st Facility - 1st Tranche, as would be expected, or in order of how many days overdue each tranche now is?" was open to misunderstanding, but it appears you were correct. fundingsecure, why are you renewing this third-ranking tranche ahead of the four first-ranking tranches that are all now overdue? The whole point of a senior loan ranking ahead of subsequent loans is that it has first call on available funds for repayment. Why else are you paying just 12% on the 1st Facility tranches but 14% on the 3rd Facility tranches???!!!
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r00lish67
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Post by r00lish67 on Jun 26, 2018 7:51:26 GMT
According to fundingsecure 's Live Chat response, yes. And that's the natural sequence you would expect when multiple facilities & tranches are overdue and some rank ahead of others. It also makes commercial sense, since the 1st Facility loans will fill rather faster / have higher levels of reinvestment than the junior ranking facilities !! Agreed. Apologies I was incorrect in my post above, sorry for multiplying FS confusion. Still, with such a golden asset, what's the difference. It's going to make a lovely set of apartments/surface car park (delete as appropriate)...How did we get to 5 facilities, again? So, FS have listed this one now, and it has indeed been done chronologically, 3rd facility 1st tranche up first, so I shall withdraw my apology I wouldn't be surprised if they did exactly the opposite next time around though! Edit: Ha, X-d with Steve Edit2: SteveT I'm probably missing something, but does it actually make much difference? The un-renewed 1st facility would still of course take precedence if the security was enforced, isn't that more the main point of the facilities? Of course, if they don't fill then that would make a difference...hmmm...
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SteveT
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Post by SteveT on Jun 26, 2018 7:59:41 GMT
Edit2: SteveT I'm probably missing something, but does it actually make much difference? The un-renewed 1st facility would still of course take precedence if the security was enforced.. It certainly does for any holders of the 1st Facility tranches wishing to be repaid rather than renew!! It's also fundamental to how FS lenders should regard future assurances of ranking priority from fundingsecure . It should be entirely obvious that, if a loan has multiple tranches of differing priority that are all overdue for repayment, any first-ranking tranches should be repaid / renewed ahead of subsequent tranches once the borrower starts stumping up some money. Update: I've now been promised a phone call from the "person in charge of this loan" .....
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r00lish67
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Post by r00lish67 on Jun 26, 2018 8:32:07 GMT
Edit2: SteveT I'm probably missing something, but does it actually make much difference? The un-renewed 1st facility would still of course take precedence if the security was enforced.. It certainly does for any holders of the 1st Facility tranches wishing to be repaid rather than renew!! It's also fundamental to how FS lenders should regard future assurances of ranking priority from fundingsecure . It should be entirely obvious that, if a loan has multiple tranches of differing priority that are all overdue for repayment, any first-ranking tranches should be repaid / renewed ahead of subsequent tranches once the borrower starts stumping up some money. Unusually, I'm still not sure I agree with you on this one Steve. In this case, the loan facility that's being renewed first is a full 4.5 months older than the first of the 1st facility loan tranches. From the point of view of those lenders, they've taken on an awful lot more risk and already been forced to hold on for much longer than the senior facility lenders. IMV, FS junior lenders get an awfully raw deal anyway with a token 1% usually added for their trouble of taking on a far riskier proposition. To push them back in the queue to receive any interest that they do finally manage to get doesn't necessarily seem fair to me. What I think we can all agree on is that FS should adopt a consistent position here. They could also either renew loans far more promptly than they have of late, or change their lending model to make it more realistic. I shan't hold my breath!
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aj
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Post by aj on Jun 26, 2018 8:38:23 GMT
It's also fundamental to how FS lenders should regard future assurances of ranking priority from fundingsecure . It should be entirely obvious that, if a loan has multiple tranches of differing priority that are all overdue for repayment, any first-ranking tranches should be repaid / renewed ahead of subsequent tranches once the borrower starts stumping up some money. I can see your point of view Steve, and am in the first charge loans myself so would like a renewal. I took the latest FS updates to mean that funds to renew all overdue tranches had been supplied to FS and as long as this is the case, the renewal order shouldn't matter too much. There is only a problem for me where funds to renew only some overdue tranches have been raised; in this case funds should probably be retained by FS until the borrower can afford to fully renew/the loan is defaulted. That way, the first charge holders get the benefit of their first charge without also jumping the queue on renewals.
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SteveT
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Post by SteveT on Jun 26, 2018 8:46:00 GMT
It certainly does for any holders of the 1st Facility tranches wishing to be repaid rather than renew!! It's also fundamental to how FS lenders should regard future assurances of ranking priority from fundingsecure . It should be entirely obvious that, if a loan has multiple tranches of differing priority that are all overdue for repayment, any first-ranking tranches should be repaid / renewed ahead of subsequent tranches once the borrower starts stumping up some money. Unusually, I'm still not sure I agree with you on this one Steve. In this case, the loan facility that's being renewed first is a full 4.5 months older than the first of the 1st facility loan tranches. From the point of view of those lenders, they've taken on an awful lot more risk and already been forced to hold on for much longer than the senior facility lenders. IMV, FS junior lenders get an awfully raw deal anyway with a token 1% usually added for their trouble of taking on a far riskier proposition. To push them back in the queue to receive any interest that they do finally manage to get doesn't necessarily seem fair to me. What I think we can all agree on is that FS should adopt a consistent position here. They could also either renew loans far more promptly than they have of late, or change their lending model to make it more realistic. I shan't hold my breath! Try a thought experiment: Imagine that it turns out there's actually only enough money to renew a couple of tranches now (for whatever reason) and that it subsequently transpires that the land is worthless (toxic waste dump, whatever). If you were in a first ranking tranche, already now well overdue for repayment, and eventually lost all of your money, how would you feel about 3rd-ranking lenders having been given the option to receive their capital and interest in full? There is also no business logic in renewing a 3rd-ranking tranche first, since a much higher % of lenders will choose to exit versus renew, and the remaining availability will take a lot longer to fill !
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r00lish67
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Post by r00lish67 on Jun 26, 2018 9:00:19 GMT
Try a thought experiment: Imagine that it turns out there's actually only enough money to renew a couple of tranches now (for whatever reason) and that it subsequently transpires that the land is worthless (toxic waste dump, whatever). If you were in a first ranking tranche, already now well overdue for repayment, and eventually lost all of your money, how would you feel about 3rd-ranking lenders having been given the option to receive their capital and interest in full? Well, I'd obviously not be happy, but I'd have to measure that against my level of hacked-offedness if I was sitting in the 3rd facility and the 1st facility was renewed before mine and then it all went wrong. From that position, I'd be saying "well, those guys already had one renewal, a bundle of interest, and a chance to exit in November - I should have had that chance back in December, and yet those guys now get another bite of the cherry first with their loans only a month late whilst mine are four months late and I'm yet to see one renewal or a penny of interest. And now never will". ...answer: I still think I'm in the chronological camp, despite the fact that I almost never take up lower facilities in practice.
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SteveT
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Post by SteveT on Jun 26, 2018 9:07:41 GMT
Try a thought experiment: Imagine that it turns out there's actually only enough money to renew a couple of tranches now (for whatever reason) and that it subsequently transpires that the land is worthless (toxic waste dump, whatever). If you were in a first ranking tranche, already now well overdue for repayment, and eventually lost all of your money, how would you feel about 3rd-ranking lenders having been given the option to receive their capital and interest in full? Well, I'd obviously not be happy, but I'd have to measure that against my level of hacked-offedness if I was sitting in the 3rd facility and the 1st facility was renewed before mine and then it all went wrong. From that position, I'd be saying "well, those guys already had one renewal, a bundle of interest, and a chance to exit in November - I should have had that chance back in December, and yet those guys now get another bite of the cherry first with their loans only a month late whilst mine are four months late and I'm yet to see one renewal or a penny of interest as of yet, and now never will". ...answer: I still think I'm in the chronological camp, despite the fact that I almost never take up lower facilities in practice. You might well be hacked off, but it's the inevitable consequence of lending with 3rd-ranking priority that, if the loan falls into arrears or defaults fully, 1st-ranking lenders get first call on available funds ahead of lower ranking lenders. To extend the thought experiment, imagine the different ranking facilities came from different lenders (rather than all from FS). Do you really think the 1st-ranking lender would be letting a 3rd-ranking lender benefit from any available funds first? It's a nonsense.
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james21
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Post by james21 on Jun 26, 2018 9:32:25 GMT
They have now pulled 3rd facility 1st tranche , thanks for nothing somebody who contacted FS about the order of renewal. This would have been an exit for me, now they may well renew another tranche that I am not in
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