Well just before FC turned the lights out for Christmas they decided to try to bury the bad news on the Devon cl*ff t*p development. It's not pretty the best outcome is a 60% recovery, assuming that the offer that has been made completes. The reason the development isn't finished.
To me this loan was always one of the most suspect of all FC loans. Don't get me wrong I love north Devon and it has some beautiful scenery. However this doesn't mean that it's a good idea to build a 'modern contemporary house' in the area which you hope to sell for £4.25m, when there is nothing similar in the area near this price. Why did Funding Circle allow so much investors money to be poured into something when there was clearly a) insufficient planning for the property to ever be completed and b) no definite interest from a buyer for the finished property. There are very few people who want a contemporary house, fewer still that can pay getting on for £5m for it (with stamp duties on a property like this!) and then even fewer who want it to be in North Devon (again nothing against the area but I assume most people with this budget want access to London, a big airport and well something that got them this money, none of these north Devon has).
I think about £2.5m has been lent by FC investors on this loan. Assuming we get a 60% recovery, which I am not holding my breath on, thats a good £1m of investors money up in smoke.
Last Edit: Oct 3, 2020 13:20:49 GMT by Ton ⓉⓞⓃ: To add "FC" to the title
I'm not in this loan by choice. Never invested in this in "self-select" era, got it as one of the presents from 18th Sept 2017 change. I'll be very happy if I get 60% of my capital from this one.
In my days of buying only FC property loans I would take no notice of the viability because I would always sell before the end. That included Devon, which was one of the last sold. However, soon after it was sold I switched on new fairer balanced FC to try it out, and it bought back £100 of Devon. Ha ha!
Post by captainconfident on Jan 9, 2019 20:53:32 GMT
I'm in this club too. I also got awarded a £100 slice of this turkey by the black box. Still, I'm relaxed about this and the 60% recovery as another black box awarded my a 9K tranche of Definite Mugging (#227). Thanks, AC!
Sorry for those of you who lost out - I am a small developer who said (on the former FC forum) right from the start it would be a disaster. Of course FC never listened to me but the whole affair strikes me as gross incompetence. Apart from a few pennies I am out of FC - wonderful!
Now down to a 35% recovery. Honestly looking back now stupid was I. Invest in a totally unproven developer to build a home that needs to be worth £4.25m in a place which while beautiful has no similar properties or a known interested buyer. A lot of investors money has gone up in smoke here.
Geezuz H...I was in this once millennia ago, ..where do you get your 35% ?
Latest update...think what you call a total ....up
The borrower has found alternative finance for the site. Valuations have been undertaking and reports are being finalised. Subject to the report being sufficient for the purposes of the lender, a signing facility will be provided so that the finance can progress. We anticipate completion by end of August. The expected repayment is approximately 35% of the total debt. We will look to default the loan once the refinance completes so that funds can be distributed amongst investors pursuant to the pari passu principle. We do not anticipate there being further recoveries due to the financial position of the borrower. We will update investors further in August.
I started my comments on this one well over a year ago
Sorry for those of you who lost out - I am a small developer who said (on the former FC forum) right from the start it would be a disaster. Of course FC never listened to me but the whole affair strikes me as gross incompetence
This was clearly a vanity project on steroids where the builders were living in their own fantasy bubble and,in my opinion just got plain greedy. I don't blame investors for this as this as they trusted FC however I do blame FC as they struck me as grossly incompetent and all they had to do was take specialist local advice and I was not the only one who warned about this one!
Maybe FC's total expertise consists of watching TV programmes such as "Building the Dream" and think the costs given are approaching reality because , believe me they aren't!
I really feel for the investors in this one because for want of a better term I think they have been conned.
As the builders demolished a delightful existing historic property for their own selfish greed and ego then tough!
Adrian - I, as an investor in this loan don’t think I am blameless. I actually remember when I invested thinking this will be hard to sell and that will all the loans the costs seemed to be out of control. I stupidly still invested, I guess out of greed. These were the days when funding circle investors could choose their loans.
I do also blame FC for promoting such a half baked proposition. In the current state where investors can’t choose their loans such loans would be unforgivable. Property development loans are also inherently hard to predict the costs, proceeds and whether the developer will actually be able to complete the thing. Looks like all three were awry on this one.
I have pretty much decided now the risk reward with most peer to peer doesn’t stack up. The whole sector is a misspelling scandal waiting to happen which I think could wipe a fair few operators out. Funding circle was clearly focused on growing loan book ahead of ipo. I run a very small business which for various reasons has a negative balance sheet. The company keeps getting sent letters from fc offering loans, that worries me!