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Post by brummiefred on Dec 6, 2013 16:55:09 GMT
Two days later and its still stalled at 49%. This despite some seemingly (?) positive answers to questions (including one of mine) added to the auction. Whilst I would have preferred a detailed commentary confirming the state of the refurbishment at this stage, its clear we aren't going to get that until the loan is fully funded and the valuer is re-instructed. Chicken and Egg time. Hi guys, As I live not too far from Redditch I have today visited the site, and would say that, whatever the scope of the pre-purchase contract, since the builder was not present on site and the site was 'clean and tidy' we can assume these works are complete. The windows at first and second floor level have been replaced and are 95% complete (some work still required to infill the curved arch brickwork over). First floor is fully open space with a staircase access from ground floor. Walls seem to be plastered. Ground floor is ready for substantial shopfitting contract. The pre-incident shopfront is in place although without glass. Fire escape doors from upper floors lead to a complex series of metal stairs serving several adjoining properties, although that from second to first floor is more a ladder than a stairs and the flat roof onto which upper floors exit is probably not suitable as a full-time permanent access route. The upper floors of the adjoining properties are used as offices or storage, didn't see any indication of residential use. Fire escape staircase terminates in small shoppers/tenant car park at the rear.
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Post by pepperpot on Dec 6, 2013 17:26:29 GMT
A big thankyou brummiefred, for going above and beyond the call of duty!
Making the most of the building would therefore seem to hinge on getting planning for residential use of the upper floors. However the loan can be serviced by the restaurant income, I'm a little more interested now.
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mikes1531
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Post by mikes1531 on Dec 6, 2013 21:04:42 GMT
I was thinking along similar lines, however Assetz have taken a different approach... they've brought in the underwriters! I don't know how much they have to pay them, or how that compares to the cost of a higher interest rate. Underwriters will be earning more than the 10.5% on offer but their percentage will be reduced of course as others bid at the current going rate. The benefit is that the loan will now go ahead (subject to all the legals, etc). Does anyone have an idea how underwriters are paid? They can't just be promised a higher interest rate, because if their presence brings forth enough bids to displace their commitment then they will have risked their money for no return. Or maybe that's a risk they take, expecting to make their money only on the deals that they aren't displaced from. That seems unlikely, as their job is to convince others to invest, and exit as soon as they can so that they can underwrite the next opportunity. I suppose they could retain their interest rate differential even if they do ultimately exit their involvement. Or perhaps they're paid an upfront cashback? Maybe a small amount if the ordinary lenders displace them before drawdown, and a larger amount if they end up having to use their own funds as part of the actual loan. If their cashback is greater than any selling fee they might be charged, they could then offer the loan parts in the aftermarket after drawdown and profit to the extent their cashback exceeds their selling costs. No doubt there are other compensation ideas that I've not thought of.
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bugs4me
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Post by bugs4me on Dec 6, 2013 22:05:18 GMT
Underwriters will be earning more than the 10.5% on offer but their percentage will be reduced of course as others bid at the current going rate. The benefit is that the loan will now go ahead (subject to all the legals, etc). Does anyone have an idea how underwriters are paid? They can't just be promised a higher interest rate, because if their presence brings forth enough bids to displace their commitment then they will have risked their money for no return. Or maybe that's a risk they take, expecting to make their money only on the deals that they aren't displaced from. That seems unlikely, as their job is to convince others to invest, and exit as soon as they can so that they can underwrite the next opportunity. I suppose they could retain their interest rate differential even if they do ultimately exit their involvement. Or perhaps they're paid an upfront cashback? Maybe a small amount if the ordinary lenders displace them before drawdown, and a larger amount if they end up having to use their own funds as part of the actual loan. If their cashback is greater than any selling fee they might be charged, they could then offer the loan parts in the aftermarket after drawdown and profit to the extent their cashback exceeds their selling costs. No doubt there are other compensation ideas that I've not thought of. I'm sure that will be covered by a full confidentiality agreement. Also I would be certain that each transaction is negotiated on it's own merits/risks/etc. Maybe they are just on a higher percentage return and their loan part decreases as us normals increase our percentage. Maybe they are on a fixed fee paid for the the borrowers in addition to the return being offered. Maybe there is more than just one firm of underwriters involved. The permutations with this sort of thing are endless. Most important thing is to get the deal live and not left floundering.
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Post by mrclondon on Dec 10, 2013 23:23:43 GMT
I suspect I'm not the only one looking at this and thinking that despite the tenancy meant to be starting on 1st Jan, its going to be an uphill struggle to get the purchase completion (and hence drawdown of our loan) before the end of the year. I'm going to hold off now, and buy off the underwriter on the aftermarket.
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mikes1531
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Post by mikes1531 on Dec 11, 2013 21:24:38 GMT
I suspect I'm not the only one looking at this and thinking that despite the tenancy meant to be starting on 1st Jan, its going to be an uphill struggle to get the purchase completion (and hence drawdown of our loan) before the end of the year. I'm going to hold off now, and buy off the underwriter on the aftermarket. I suppose there could be a last minute rush of bids, but I think it's very likely that the underwriter is going to be left with more than £100k of this loan. As a result, I'd expect there to be a fair amount of loan parts offered in the aftermarket in January -- presuming the loan is drawn down by then.
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Post by batchoy on Dec 11, 2013 21:42:13 GMT
I wonder how much preparation has all ready been done on this one with the aim of getting a pre-Christmas completion and the tenant in on 1 Jan hence the starting of the auction with out a signed off credit report and the underwriting.
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