Various Loan Updates (Assetz Capital)

Re Loan 86 - the 'Scottish loan'

I don't think this auction is even intended to produce sufficient cash to clear the loan on it's own.

I mentioned earlier


The first auction reference I found for the loan property, and I'm fairly certain the same one that others commenting here have seen, was described as:

But....there is no auction date on the auction details, the Lot No. on this does not occur in any recent catalogue, 9/10 Dec,  and this auction house has no further entries in their calendar until Feb. So I looked further and found this, same address, with another auction house, going under the hammer on 17 Dec.

AC's updates make no mention of an intention to sell all seven flats, rather that he was 'looking to sell assets to reduce overall debt and ongoing servicing costs. In order to do this he has contacted an Auction House to progress these sales'.

IMHO, sl75's suggested possible lenders' concerns are unlikely to have a chance to come to pass.  With the value of the security most likely having been increased by the works already completed, if the borrowers wish to use that to increase their borrowing and are refused by AC -- as now seems inevitable unless AC call for a re-vote -- then they really have only one option.  And that's to take their business elsewhere.

With the refusal by AC meaning they can't have a second charge -- whether borrowing additional funds from AC or elsewhere -- they'll go to another lender and refinance into a new, larger, first charge.  And AC lenders will find that the existing loan that they're happy to hold will disappear via an early repayment.  The result will be £3.3M of cash coming back into lenders' accounts -- and we all know how difficult it will be to re-deploy that within AC.  The entire list of AC's upcoming loans totals just £2.0M -- and some of those might not happen at all.  Even including the £0.4M of parts available on the SM still would leave about £1M of lenders' funds with nowhere to go.

I really don't think AC did an adequate job of explaining to the voters what the consequence of a vote for either of the options was likely to be.  Perhaps they thought the appropriate outcome was so obvious that they didn't need to provide a detailed explanation.  We have to hope that this experience will make them think a bit harder about what their lenders need to know when the next vote request email goes out.

Now credited along with multiple interest payments, two of which I dont know what they cover. I assume default interest from 9/14-7/15 is still outstanding. chris I dont suppose there is anyway of adding extra detail to the statement entries so it is clear what such unusual deposits are?

Edit: After further consideration Ive worked out what the two payments are (2 weeks in Oct), though there's a third minor one still puzzling me ah got it, last day at default.

So @10% October payment to 17/10
              week to 24/10
              week to 31/10
    @13% 1/11-7/12
              8/12

Another thought about the vote to refuse a second charge - maybe those who voted that way had as their preferred option a complete refinance of the entire loan amount?

AC would presumably be in a position to determine whether the vote against was from investors who did so for sound and well thought-out reasons, or those who got confused by the question.

I suppose that's a possibility, but if all they wanted to achieve was to have their investment returned they could have accomplished that easily enough by selling their parts on the SM.  (Unless, I suppose, they are holding such a huge position that they thought that trying to sell it all would be difficult.  But considering the current supply shortage I'm not sure that's a realistic concern.)  And if they wish to continue investing at AC, surely they'd be better off not trying to shrink the AC loan book with a £3.3M redemption -- because that would aggravate the supply/demand balance that's already very lopsided.

An interesting possibility.

If AC can get a few more loans like the one expected to draw down today written, and can retain pieces of those for the QAA, then they'll be able to continue to increase the investment limits on the QAA and it won't be long before they can tell their underwriters where to go. 

A £3.9M loan may be beyond their internal underwriting capability now, but in a few months' time...

I have a smallish holding in this loan but with no real desire to increase it.

I didn't vote on this proposal.  I would like to see more loans through the platform but as a current holder of the loan I can see that adding a second charge increases the chances of a forced sale of the security by the second charge holder.  Any sale of the asset at a distressed price increases the chance of me losing money.

That's probably why so many people voted against.