Carter
Member of DD Central
Posts: 250
Likes: 549
|
Post by Carter on Feb 1, 2019 16:33:01 GMT
Update noting sight of refinance offer in principle from the borrower, reportedly enough to cover repayment of both charges.
|
|
|
|
Post by supernumerary on Feb 1, 2019 17:21:37 GMT
Update noting sight of refinance offer in principle from the borrower, reportedly enough to cover repayment of both charges. The exact quote; "...the level of refinance being offered to the borrower’s company would be sufficient to repay the outstanding balance owed under the first charge loan in full."
|
|
sl75
Posts: 2,092 
Likes: 1,245
|
Post by sl75 on Feb 1, 2019 17:26:39 GMT
Update noting sight of refinance offer in principle from the borrower, reportedly enough to cover repayment of both charges. The exact quote; "...the level of refinance being offered to the borrower’s company would be sufficient to repay the outstanding balance owed under the first charge loan in full."That's the quote from PBL199. The one from PBL201 says it's sufficient to pay the second charge loan in full.
So, unless someone is being extremely disingenuous when writing the update to PBL201 (who'd have thought we'd have to deduct the amount required to pay off the first charge?!) we can reasonably read into the two updates that it's enough to pay off both.
|
|
|
|
Post by supernumerary on Feb 1, 2019 20:05:33 GMT
The exact quote; "...the level of refinance being offered to the borrower’s company would be sufficient to repay the outstanding balance owed under the first charge loan in full."That's the quote from PBL199. The one from PBL201 says it's sufficient to pay the second charge loan in full. So, unless someone is being extremely disingenuous when writing the update to PBL201 (who'd have thought we'd have to deduct the amount required to pay off the first charge?!) we can reasonably read into the two updates that it's enough to pay off both.
Good news indeed. 
|
|
|
|
Post by supernumerary on Mar 28, 2019 9:51:12 GMT
Update noting sight of refinance offer in principle from the borrower, reportedly enough to cover repayment of both charges. SO, are the negotiations with the borrower’s company, by providing Lendy with a refinance offer in principle from a third-party funder (“OIP”), now taking longer? 
|
|
TitoPuente
Member of DD Central
Posts: 624
Likes: 655
|
Post by TitoPuente on Apr 2, 2019 17:44:08 GMT
According to the VR the 90 day vacant possession value is £8.75m. The loan is £4m + accrued interest. Lendy should be appointing receivers and marketing the property as in other loans that have a lot less valuation margin than this one. The update is irrational.
|
|
|
|
Post by mrclondon on Apr 2, 2019 18:24:40 GMT
According to the VR the 90 day vacant possession value is £8.75m. The loan is £4m + accrued interest. Lendy should be appointing receivers and marketing the property as in other loans that have a lot less valuation margin than this one. The update is irrational. The valuation is a residual value valuation back calculated from GDV. It is NOT a distressed sale valuation, and is only applicable if someone wants to build the EXACT student development that our borrower planned to, and was engaged in a bidding "war" with someone else with the same intent.
The security is "0.89 acres occupied by a 2 storey light industrial warehouse / office building scheduled for demolition" according to page 3 of the VR pdf. In other words, the site could be worth as little as 0.9 acres of brownfield land, less the cost of demolishing the building thats currently on the site if its not been demolished since the VR.
This loan, and the others like it were a gamble on the borrower actually building the student apartments. He didn't, and we have to accept the consequences of the gamble not working out.
To answer the specific point in your post, Lendy's approach is to give the borrower the time to decide whether to make an offer for the site (i.e. an offer to settle the loan) and only when that process has reached a conclusion are receivers being appointed. (Note he has made offers on a couple of the sites so it is a genuine process). Surely it is appropriate to allow the only hope of a fullish recovery to be persued before recceivers are appointed to dispose of the site as a distressed sale ?
Unfortunately for yourself and hundreds like you the appreciation that a residual value valuation is meaningless if the loan defaults is a lesson that is being learnt the hard way.
|
|
|
|
Post by supernumerary on Apr 2, 2019 20:24:55 GMT
The valuation is a residual value valuation back calculated from GDV. It is NOT a distressed sale valuation, and is only applicable if someone wants to build the EXACT student development that our borrower planned to, and was engaged in a bidding "war" with someone else with the same intent. With the update stating that; "The borrower has made an offer to refinance this loan, however it is below the amount currently owed so we are considering options, which we are discussing with our third party advisors." Clearly then the plan would be to do what they are proposing for DFL033, I quote the 01/02/2019 update for DFL033; "M***** B***** have sought external specialist advice which indicates that a proposal can be reached in the next 14 days, to detail how the security property can be built out." Maybe that would now be an option for this loan.
|
|
TitoPuente
Member of DD Central
Posts: 624
Likes: 655
|
Post by TitoPuente on Apr 2, 2019 21:13:44 GMT
According to the VR the 90 day vacant possession value is £8.75m. The loan is £4m + accrued interest. Lendy should be appointing receivers and marketing the property as in other loans that have a lot less valuation margin than this one. The update is irrational. The valuation is a residual value valuation back calculated from GDV. It is NOT a distressed sale valuation, and is only applicable if someone wants to build the EXACT student development that our borrower planned to, and was engaged in a bidding "war" with someone else with the same intent.
The security is "0.89 acres occupied by a 2 storey light industrial warehouse / office building scheduled for demolition" according to page 3 of the VR pdf. In other words, the site could be worth as little as 0.9 acres of brownfield land, less the cost of demolishing the building thats currently on the site if its not been demolished since the VR.
This loan, and the others like it were a gamble on the borrower actually building the student apartments. He didn't, and we have to accept the consequences of the gamble not working out.
To answer the specific point in your post, Lendy's approach is to give the borrower the time to decide whether to make an offer for the site (i.e. an offer to settle the loan) and only when that process has reached a conclusion are receivers being appointed. (Note he has made offers on a couple of the sites so it is a genuine process). Surely it is appropriate to allow the only hope of a fullish recovery to be persued before recceivers are appointed to dispose of the site as a distressed sale ?
Unfortunately for yourself and hundreds like you the appreciation that a residual value valuation is meaningless if the loan defaults is a lesson that is being learnt the hard way.
Thank you for your explanation. It makes sense and is very helpful. Looking again at the VR it is evident that the method is useless for the case and it was a mistake to rely on such thing. What is not helpful is your last sentence. I see that you have unfortunately fallen prey of "the London loan". I wouldn't have touched that with a radiation suit, but I am not cocky enough to give you life lessons.
|
|
zccax77
Member of DD Central
Posts: 82
Likes: 76
|
Post by zccax77 on Apr 2, 2019 21:22:44 GMT
Good put down Tito. I think we are all victims here, and the only people riding into the sunset with our money is LB and the borrowers. I pray the FCA become more proactive with sham outfits like Lendy in the future.
|
|
|
|
Post by mrclondon on Apr 2, 2019 21:41:33 GMT
What is not helpful is your last sentence. I see that you have unfortunately fallen prey of "the London loan". I wouldn't have touched that with a radiation suit, but I am not cocky enough to give you life lessons. Apologies if you felt that comment was patronising, it wasn't inteneded to be. More a reflection that I think many retail lenders (which I'm not) have been badly let down by the FCA's approach to regulating the sector. (Again that is not to prejudge your circumstances, simply a belief in general terms. Unfortunately on this forum I was pretty much alone in suggesting a few years ago that the typical self select loan was not appropriate for retail investors.) As far as the London Loans go, I am indeed in the larger one, a consious decision based on my analysis of the security and a belief that it was worth around 100% of the loan value OMV, and c. 80%* of the loan value as a distressed sale, which with marketing targeted at a very specific demographic, I believe is still the case. Obviously I was unaware of the borrower's history on other projects, and have learnt my lesson there - avoid offshore borrowers that are too costly to research. * An estimated 80% distressed sale value vs loan is my cut off below which I don't lend.
|
|
adrianc
Member of DD Central
Posts: 10,024
Likes: 5,150
|
Post by adrianc on Apr 3, 2019 11:59:26 GMT
The valuation is a residual value valuation back calculated from GDV. It is NOT a distressed sale valuation, and is only applicable if someone wants to build the EXACT student development that our borrower planned to, and was engaged in a bidding "war" with someone else with the same intent.
The security is "0.89 acres occupied by a 2 storey light industrial warehouse / office building scheduled for demolition" according to page 3 of the VR pdf. In other words, the site could be worth as little as 0.9 acres of brownfield land, less the cost of demolishing the building thats currently on the site if its not been demolished since the VR. ... Looking again at the VR it is evident that the method is useless for the case and it was a mistake to rely on such thing. It's an issue that applies to all development loans. If everybody ran a mile based on that, then there would never be any development finance lent, and so no development ever. There's a large proportion of the cost goes in to the site - especially if it's already occupied - before you even start to put anything above ground level. Planning and design, site clearance, groundworks and utilities, foundation work. By the time the development is anywhere close to being sellable as a viable proposition, you're almost finished and build-out becomes a no-brainer. Before that point, unless you have a buyer or two whose vision maps precisely to yours (and if it's that good a plan, why did the project go bust?), then all you're selling is a muddy brownfield development plot that needs clearing again.
|
|
|
|
Post by charliebrown on Apr 3, 2019 13:41:00 GMT
I have been taken in by this valuation subterfuge. At that time I put a lot of trust in LY before I realised they can never be trusted, but I always remember reading something somewhere that stated valuations never include any hope value under any circumstances. I’d like to see LY audited and investigated. I’d like to know whether they’re just unethical or they’re something much worse.
|
|
adrianc
Member of DD Central
Posts: 10,024
Likes: 5,150
|
Post by adrianc on Apr 3, 2019 14:06:50 GMT
I have been taken in by this valuation subterfuge. At that time I put a lot of trust in LY before I realised they can never be trusted, but I always remember reading something somewhere that stated valuations never include any hope value under any circumstances. I’d like to see LY audited and investigated. I’d like to know whether they’re just unethical or they’re something much worse. So lemme just get this straight... You looked at the valuation doc for PBL199, and you read through it... and you understood that the 90day vacant possession value of £8.75m referred to an absolute bare minimum floor value for 0.89acres of mud and rubble? Even though that was clearly shown to be a discount from the "site valuation" clearly back-calculated from the rental value of the finished units at a stated yield after build costs were deducted? Even though the loan particulars state for a fact that the £4m includes 100% of the purchase price of the site (after the site's value has "increased substantially" through the granting of planning permission), prior to development starting?
|
|
|
|
Post by charliebrown on Apr 3, 2019 14:15:44 GMT
I have been taken in by this valuation subterfuge. At that time I put a lot of trust in LY before I realised they can never be trusted, but I always remember reading something somewhere that stated valuations never include any hope value under any circumstances. I’d like to see LY audited and investigated. I’d like to know whether they’re just unethical or they’re something much worse. So lemme just get this straight... You looked at the valuation doc for PBL199, and you read through it... and you understood that the 90day vacant possession value of £8.75m referred to an absolute bare minimum floor value for 0.89acres of mud and rubble? Even though that was clearly shown to be a discount from the "site valuation" clearly back-calculated from the rental value of the finished units at a stated yield after build costs were deducted? Even though the loan particulars state for a fact that the £4m includes 100% of the purchase price of the site (after the site's value has "increased substantially" through the granting of planning permission), prior to development starting? No, and I don’t even understand what you’ve just written. I looked at the published LTV and LY’s assurances that there was no hope value attached. I didn’t invest much in this one anyway so no problem. However, is LY’s published LTV designed to be a trap for less knowledgeable investors who trusted an FCA approved platform.
|
|
