markdirac
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Post by markdirac on Jan 13, 2017 12:24:15 GMT
I note that the security's value of £850k seems to include at least some element of planning permission hope: "On the assumption of the Grant of Planning Consent/Consents..."
I cannot get a feel for the extent to which the original (before works) value of £850k will fall, and for how long, once works get underway.
Glad to see that the LTV is less than the typical 70%.
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mikes1531
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Post by mikes1531 on Jan 13, 2017 15:29:57 GMT
I note that the security's value of £850k seems to include at least some element of pl anning permission hope: "On the assumption of the Grant of Planning Consent/Consents..."
I cannot get a feel for the extent to which the original (before works) value of £850k will fall, and for how long, once works get underway.I thought that if they got the PP the value would increase to about £2M. If that's the case, then the security should be fine even after the existing building is demolished. The downside case is that they don't get the PP. How much would the property be worth in that situation?
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stub8535
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Post by stub8535 on Jan 22, 2017 15:37:49 GMT
Looking at valuation used for ltv it seems to presume planning already granted. Property on site to be demolished so 850k land value! Really? NOT EVEN AT -5% Bargepole anyone?
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Liz
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Post by Liz on Jan 22, 2017 16:28:02 GMT
Looking at valuation used for ltv it seems to presume planning already granted. Property on site to be demolished so 850k land value! Really? NOT EVEN AT -5% Bargepole anyone? Yes bargepole for me too. Don't be conned by an extra bit of return, worry about return on capital. In my experience, it is often the loans that need to hike rates and offer incentives, that default.
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mikes1531
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Post by mikes1531 on Jan 22, 2017 17:05:31 GMT
Looking at valuation used for ltv it seems to presume planning already granted. Property on site to be demolished so 850k land value! Really? NOT EVEN AT -5% Bargepole anyone? Yes bargepole for me too. Don't be conned by an extra bit of return, worry about return on capital. In my experience, it is often the loans that need to hike rates and offer incentives, that default. I don't worry too much about return on capital. Instead, I worry about return of capital! The valuation does strike me as being overly optimistic. The VR seems to have calculated the value starting with the gross rental and turned that into a capital value that using a capitalisation rate of 7%. While a potential buyer might be willing to accept a 7% gross yield on a building with minimal expenses, ISTM that supported living units don't fit that description. So I'd expect that the capitalisation calculation should be based on a higher percentage or applied to a net rental value, either of which would produce a lower valuation -- and possibly significantly lower. And while I expect that the borrower has had a positive reaction to their pre-planning application, before I'd invest I'd want to know what the value would be if planning permission were to be refused. Would an ordinary apartment block be suitable for that location? If so, what would the property valuation be for a development of that sort?
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Liz
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Post by Liz on Jan 23, 2017 12:41:18 GMT
Yes bargepole for me too. Don't be conned by an extra bit of return, worry about return on capital. In my experience, it is often the loans that need to hike rates and offer incentives, that default. I don't worry too much about return on capital. Instead, I worry about return of capital! The valuation does strike me as being overly optimistic. The VR seems to have calculated the value starting with the gross rental and turned that into a capital value that using a capitalisation rate of 7%. While a potential buyer might be willing to accept a 7% gross yield on a building with minimal expenses, ISTM that supported living units don't fit that description. So I'd expect that the capitalisation calculation should be based on a higher percentage or applied to a net rental value, either of which would produce a lower valuation -- and possibly significantly lower. And while I expect that the borrower has had a positive reaction to their pre-planning application, before I'd invest I'd want to know what the value would be if planning permission were to be refused. Would an ordinary apartment block be suitable for that location? If so, what would the property valuation be for a development of that sort? Yes that was a typo. Return OF capital is what is meant.
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littleoldlady
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Post by littleoldlady on Aug 22, 2017 11:39:46 GMT
Everyone on here seems to be leaving FS at a rate of knots. FS however don't seem bothered at all, I assume there's plenty of Newbies coming on board to replace us, and then some. Had you considered that longstanding investors who have been there since the very first loan may still be actively increasing their funds on the platform ? (e.g. me, typically by several thousand pounds a month, every month). Yes, there are poor value loans on FS (as there are on every platform), but equally FS has some of the best value loans anywhere in p2p. 12% for good first charge residential property / 13% for decent second charge residential property* is WAY over priced, 8% and 9% respectively is perhaps a better reflection of the true risk (even allowing for rollup of interest during the term increasing the LTV) I've had one (partial) capital loss on FS since launch - the L***n art, and as I posted recently I have current exposure to 3 distressed loans (2 x speedboats + wind turbine). I struggle to find good value on MT/COL/L. (* e.g. yesterday's Redhill renewal) I was motivated by your post to have another look, having run down my loan book to just the defaults. I see that loan 1739155574 values land in Liverpool at £11.4 million per acre. TBH this does not increase my confidence in their valuations. Why do you think the borrowers are paying 'way over the price'? Are they just stupid?
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Post by mrclondon on Aug 23, 2017 9:30:13 GMT
Had you considered that longstanding investors who have been there since the very first loan may still be actively increasing their funds on the platform ? (e.g. me, typically by several thousand pounds a month, every month). Yes, there are poor value loans on FS (as there are on every platform), but equally FS has some of the best value loans anywhere in p2p. 12% for good first charge residential property / 13% for decent second charge residential property* is WAY over priced, 8% and 9% respectively is perhaps a better reflection of the true risk (even allowing for rollup of interest during the term increasing the LTV) I've had one (partial) capital loss on FS since launch - the L***n art, and as I posted recently I have current exposure to 3 distressed loans (2 x speedboats + wind turbine). I struggle to find good value on MT/COL/L. (* e.g. yesterday's Redhill renewal) I was motivated by your post to have another look, having run down my loan book to just the defaults. I see that loan 1739155574 values land in Liverpool at £11.4 million per acre. TBH this does not increase my confidence in their valuations. Why do you think the borrowers are paying 'way over the price'? Are they just stupid? Your figures seem way off, but never the less your point is valid. It is a residual value valuation of a development plot. (0.5 acres valued at £900k => £1.8m / acre) IF the plot is developed then yes its worth that, if not its probably worth less than £200k to a landbank investor buying it at auction. I'm not in this loan, and won't be until development starts (if FS provide the development finance).
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stub8535
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Post by stub8535 on Aug 23, 2017 11:09:17 GMT
I was motivated by your post to have another look, having run down my loan book to just the defaults. I see that loan 1739155574 values land in Liverpool at £11.4 million per acre. TBH this does not increase my confidence in their valuations. Why do you think the borrowers are paying 'way over the price'? Are they just stupid? Your figures seem way off, but never the less your point is valid. It is a residual value valuation of a development plot. (0.5 acres valued at £900k => £1.8m / acre) IF the plot is developed then yes its worth that, if not its probably worth less than £200k to a landbank investor buying it at auction. I'm not in this loan, and won't be until development starts (if FS provide the development finance). Can't see FS falling for financing that one👿 or maybe it will be at 6% interest? Sorry 26%!
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littleoldlady
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Post by littleoldlady on Aug 23, 2017 18:12:20 GMT
I was motivated by your post to have another look, having run down my loan book to just the defaults. I see that loan 1739155574 values land in Liverpool at £11.4 million per acre. TBH this does not increase my confidence in their valuations. Why do you think the borrowers are paying 'way over the price'? Are they just stupid? Your figures seem way off, but never the less your point is valid. It is a residual value valuation of a development plot. (0.5 acres valued at £900k => £1.8m / acre) IF the plot is developed then yes its worth that, if not its probably worth less than £200k to a landbank investor buying it at auction. I'm not in this loan, and won't be until development starts (if FS provide the development finance). I was just quoting the General Information on the platform: This is a consolidation of loans 2627685111 and 2978831978 and additional borrowing to cover interest and ongoing planning costs.
A 6 month loan secured by a first legal charge against a plot of land in Liverpool.
The client purchased the site with the intention of submitting a planning application for the demolition of the existing building and the construction of 14 x 1 bedroom support living apartments and 6 x 1 bedroom disabled access living units.
The loan will be refinanced once planning has been granted.
Update: 02/08/17
Following the pre-app meeting between the borrower's architects and the planners, we have received the following update from the architects:
"We had submitted an initial proposal for planning pre-application comment, and following receipt of their comments, have made significant changes to the design and accommodation concept for the site. We are developing a revised design for a 3-4 storey block facing onto W*** D**** Road, with some 2 storey rear blocks within the parking area and rear communal gardens. Our expectation is that we should be able to provide on the site up to 46 one-bedroom self-contained units, in 3 or 4 self-contained groups. "
As well as demonstrating positive feedback from the planners for development of the site, the revised proposal increases the site from 20 bedrooms to 46 bedrooms. We understand this is driven by the desire of the planners to maintain a consistent skyline across the city combined with the need for assisted living schemes.
The valuation report, assuming planning is granted for the intended scheme, is £2m on a gross development value of £4m. Without planning, it is £850k - £900k.
We have received advice from the valuer that the land value, assuming planning is granted for the revised scheme, is £5.2mfor 0.46 acres so £11.4m per acre
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Post by mrclondon on Aug 23, 2017 18:59:51 GMT
(I've moved these recent posts from the Turbine Loan thread). littleoldlady - that £5m plus is part of the profit the developer will achieve by securing development finance, and building out the site after planning permission for the super dense rabbit hutches is approved. Hence why I said I'd (probably) be in if it ever becomes a development loan.
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littleoldlady
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Post by littleoldlady on Aug 23, 2017 21:50:45 GMT
(I've moved these recent posts from the Turbine Loan thread). littleoldlady - that £5m plus is part of the profit the developer will achieve by securing development finance, and building out the site after planning permission for the super dense rabbit hutches is approved. Hence why I said I'd (probably) be in if it ever becomes a development loan. I realise that. However the idea that land in Liverpool with any planning consent whatsoever could be worth £11.4m per acre strikes me as ludicrous and I see no reason to revise my decision to exit. Just the South Wales property to go but even if I get full return on that the losses on the turbine and boatyard outweigh my all time interest earned on FS considerably. It is the only platform where I have so far suffered a net loss.
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Post by portlandbill on Mar 12, 2018 13:01:30 GMT
reading through the latest update (9/3/18), I don't understand why this loan isn't now due for renewal? Is it just being left to continue?
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rs
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Post by rs on Mar 12, 2018 13:04:42 GMT
it is due for renewal but I suspect the value of site increases soon due to favourable planning applications. This will enable the interest to be rolled up (ie borrower doesn't pay the interest) during renewal.
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mikes1531
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Post by mikes1531 on Mar 20, 2018 0:42:37 GMT
it is due for renewal but I suspect the value of site increases soon due to favourable planning applications. This will enable the interest to be rolled up (ie borrower doesn't pay the interest) during renewal. I also expect that the value of the site would increase if PP is given. However, the update from earlier this month suggested that if the meeting on Wednesday goes positively the plans would be resubmitted. That's all well and good, but how long might it then take to get from there to actually having approval?
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