pikestaff
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Post by pikestaff on Aug 29, 2014 15:36:40 GMT
Email from David Ricketts: "We were previously told that the borrower was pursuing a sale of the property but it appears that this is no longer proceeding. As such, we were approached yesterday to see if we will provide longer term finance against the income stream provided by the student accommodation. Further information has been requested to see if a deal is serviceable at an appropriate return to lenders and this is expected today. Once received we will be able to provide a quick answer to the borrower and if a deal looks achievable we will look to provide a new auction next week to allow all lenders to bid."I'd like to know why the borrower has decided not to sell. I expect we will find out if there is a new auction, but not necessarily otherwise. I don't see the new auction (if there is one) being concluded by 5 September so it looks as if there will be a delay and, presumably, some default interest. Question for davidricketts (or AC generally): Can you confirm that default interest will be payable from 5 September on the existing loan, even if AC decides to run a new auction? |
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Post by davidricketts1 on Aug 29, 2014 15:53:57 GMT
Should be fairly simple one that one but it isn't. Yes default interest will be accruing but I'm unsure how we'll be managing this yet if we're looking at doing a new loan. May be a case of setting a definitive date to drawdown (easier in this case as security is already held) and calculating interest to that date.
Something to consider over the weekend I think.
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pikestaff
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Post by pikestaff on Aug 29, 2014 16:51:49 GMT
Thanks, David.
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Post by batchoy on Aug 29, 2014 21:33:02 GMT
Should be fairly simple one that one but it isn't. Yes default interest will be accruing but I'm unsure how we'll be managing this yet if we're looking at doing a new loan. May be a case of setting a definitive date to drawdown (easier in this case as security is already held) and calculating interest to that date. Something to consider over the weekend I think. From a lender's point of view I don't see what the difficulty is; we are talking two separate and distinct loans, one in default which should accrue default interest until it is paid off and a new loan which will be used to pay the defaulting loan. The only point that there could be seen to be an issue is if the borrower perceives AC as drawing out the the drawdown process on the second loan and in that way profiting from the default interest on the first loan.
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Post by cyrilmadrid on Aug 29, 2014 21:42:36 GMT
What about the sister loan Epp*g ?
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j
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Post by j on Aug 29, 2014 21:52:09 GMT
Should be fairly simple one that one but it isn't. Yes default interest will be accruing but I'm unsure how we'll be managing this yet if we're looking at doing a new loan. May be a case of setting a definitive date to drawdown (easier in this case as security is already held) and calculating interest to that date. Something to consider over the weekend I think. From a lender's point of view I don't see what the difficulty is; we are talking two separate and distinct loans, one in default which should accrue default interest until it is paid off and a new loan which will be used to pay the defaulting loan. The only point that there could be seen to be an issue is if the borrower perceives AC as drawing out the the drawdown process on the second loan and in that way profiting from the default interest on the first loan. If the borrower struggles to repay the first loan, surely they cannot be allowed to roll over the amount into anew loan at similar or lower rate? That would be preferential treatment against other borrowers had had defaulted/paid back late but were still charged higher default interest
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j
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Post by j on Aug 29, 2014 22:05:17 GMT
Having just read the q&a on AC, a q was asked on 30th July re:progress of property sale & indications from borrower were that it was all progressing well. Some 3 weeks later, they seem to have changed their mind! I'm most likely being unnecessarily/overly cynical but, you would think they knew what course to take 3 weeks ago?
We'll find out next week
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Post by Ton ⓉⓞⓃ on Aug 29, 2014 22:49:59 GMT
I'm fairly open to the idea of this rolling over into a new loan with a new auction. The AC group already have experience in this area, and the fact that it's being considered clearly means it's possible just can it be structured and importantly what's the exit. Will this deal be competing with other AC group deals on yield? An article in the Telegraph IN EDIT The article talks about the subject of student accommodation mentions Stuart Law owner of Assetz. |
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pikestaff
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Post by pikestaff on Aug 30, 2014 6:35:36 GMT
What about the sister loan Epp*g ? Good question. I have never understood how the second charges would work (I with 2nd charge on E and vice versa) unless the two properties were sold, and the loans repaid, simultaneously.
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Post by jevans4949 on Aug 30, 2014 9:40:24 GMT
Hmmm ... When these two first came up, I suspected we would run into trouble somewhere. However, I was desperate to place some money somewhere.
OTOH, it will probably work out OK in the end.
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kermie
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Post by kermie on Aug 30, 2014 10:12:49 GMT
I don't think I'm being particularly insightful when I suggest that any subsequent auction based on longer-term rental returns will be in single figures, and certainly not at the present 12%. In fact, I'd expect something much closer to the levels of the older Lend-to-Let deals. Whether or not an auction flies depends on a few factors. The questions that immediately spring to mind are i) what level of underwriting would be available - this will be required, no question, and ii) what's the current occupancy rate, and iii) what's the current rental yield/serviceability. This one may start to look more interesting than I'd realised. Thanks Ton ⓉⓞⓃ for the link. IN EDIT: the E***g credit report indicates Ips**** is fully occupied. |
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Post by Ton ⓉⓞⓃ on Aug 30, 2014 11:52:32 GMT
*100% occupancy is, AFAIK, normal in this area. I think the income stream should be able to sustain atleast 10%. Considering it's just been refurbed, maintenance won't be too much of a problem if the builder did it right, this should enable the Landlord to have a modest increase in rent. Can anyone remember what the students are paying (£100-140)?
(*If you remember the Manc. Hotel was getting 60% but doesn't relate really.)
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Post by cyrilmadrid on Aug 30, 2014 17:32:50 GMT
What about the sister loan Epp*g ? Good question. I have never understood how the second charges would work (I with 2nd charge on E and vice versa) unless the two properties were sold, and the loans repaid, simultaneously. Looks like this one is going through a different route, BTL refinance.
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j
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Post by j on Aug 30, 2014 18:14:12 GMT
Good question. I have never understood how the second charges would work (I with 2nd charge on E and vice versa) unless the two properties were sold, and the loans repaid, simultaneously. Looks like this one is going through a different route, BTL refinance. Which most likely will mean a fairly lower rate than the current 12% with longer term on the horizon.Wonder what the minimum charge period on any new loan will be?
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kermie
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Post by kermie on Aug 30, 2014 19:36:15 GMT
Absolutely. I took the Epp*** update to mean "mainstream" BTL, not via AC. I concur with earlier comments that given the cross-second charges, I can't see how these two loans can easily be redeemed without coordination...i.e. at the same time (which given the final payments are 5/9 and 25/9 might need a bit of thinking about). In retrospect, I don't really see the point of the secondary cross-charges beyond a bit of a warm fuzzy feeling - indeed the credit reports ignored them in terms of LTV calculations. Negative pledges would have achieved the same thing, I think?
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