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Post by mrclondon on Apr 1, 2020 14:16:45 GMT
I decided against posting my thoughts yesterday, considering it probably best to initially observe lender behaviour on this new loan. 3 hours since opening there is still good availability in both the A and B tranches of what is a small loan, in an easy to understand sector of the economy.
Ordinarily I would have taken up a slice of the A tranche, but have held back despite having cash available (though in fairness the cautious part of me is waiting for FS to process my withdrawal requests from late last week before making many more new investments.)
Two things concern me here, one general and one loan specific
a) I have money in the previous 2 loans that have been awaiting drawdown for approaching 3 weeks now. Whilst entirely understandable that legal processes will be even slower than normal, the lack of comms from PL is less excusable. For the duration of the lockdown there needs to be clear expectation setting from PL as to timetables for drawdown.
b) The lease of the operating company expires in Dec 2020. Yes, PL have explained the strength of this tenant, and have reported the length of the lease was set by the borrower not the tenant in the hope ( ?) of achieving higher rent from other sources thereafter. This despite the valuation suggesting its already over rented, which raises concerns in my mind regarding the "business mind" of the borrower (I'm in his previous loan). In ordinary times I would have concluded it makes little difference to risk, but in present circumstances am not convinced the rate offered reflects the fact there is less than 8 months of the lease remaining.
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sapphire
Member of DD Central
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Post by sapphire on Apr 1, 2020 15:08:43 GMT
Whilst proplend appear to have stopped responding on this Forum (their last post was on 24th Jan), I do hope they communicate via email on the points raised above. To add a couple of my concerns: *Whilst a PG should not be treated as providing a 'cast iron' assurance, it can sometimes provide a possible fallback, especially if the borrower/guarantor has a significant NW spread across a diversified portfolio. The PG amount also helps to determine the extent of borrower/guarantors personal skin in the game. In this one, it doesn't appear that the Net Worth underpinning the PG is sufficiently strong, especially as the NW is in illiquid assets in the same asset class (residential properties) as this loan. *The VR is dated 13th March i.e just about the time when the current crisis started impacting the UK financial markets. Unless I have missed it, I couldn't find any comments from the valuer on his views on the possible impact/sensitivity of the current crisis on this property's value. (VR refers to Brexit but not Covid). Valuers's views on possible Covid impact could have been provided as an addendum to the report. (Whilst the FLR notes the borrowers "attestation" as regards Covid-19 impact, I would like to know the valuer's views on the potential short & long term impact of this crisis on the value of this specific property/properties in this area.) Happy to be corrected if I have missed something. |
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Post by uksoul on Apr 1, 2020 15:36:41 GMT
I decided against posting my thoughts yesterday, considering it probably best to initially observe lender behaviour on this new loan. 3 hours since opening there is still good availability in both the A and B tranches of what is a small loan, in an easy to understand sector of the economy.
Ordinarily I would have taken up a slice of the A tranche, but have held back despite having cash available (though in fairness the cautious part of me is waiting for FS to process my withdrawal requests from late last week before making many more new investments.)
Two things concern me here, one general and one loan specific
a) I have money in the previous 2 loans that have been awaiting drawdown for approaching 3 weeks now. Whilst entirely understandable that legal processes will be even slower than normal, the lack of comms from PL is less excusable. For the duration of the lockdown there needs to be clear expectation setting from PL as to timetables for drawdown.
b) The lease of the operating company expires in Dec 2020. Yes, PL have explained the strength of this tenant, and have reported the length of the lease was set by the borrower not the tenant in the hope ( ?) of achieving higher rent from other sources thereafter. This despite the valuation suggesting its already over rented, which raises concerns in my mind regarding the "business mind" of the borrower (I'm in his previous loan). In ordinary times I would have concluded it makes little difference to risk, but in present circumstances am not convinced the rate offered reflects the fact there is less than 8 months of the lease remaining.
The property is rented by the local authority. There is massive demand for social housing in the area so extremely likely the lease will be renewed by the LA if higher rent not achieved elsewhere. The loan availability is dwindling and should be fully invested within a day or 2. I did not invest in this loan as more interested in the upcoming Southwark loan.
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eeyore
Member of DD Central
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Post by eeyore on Apr 1, 2020 15:44:25 GMT
Four-and-a-half hours since launch, Tranches A and C are filled leaving just a chunk of Tranche B.
As regards drawdown, Proplend do seem to be frustrating at times over the lengthy waits from the loan being filled to actual drawdown. In this case, the bulk of loan is to replace an existing lender with an upcoming redemption date which presumably will impose a deadline for drawdown - I'm hoping that the borrower doesn't leave it to the last minute!
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eeyore
Member of DD Central
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Post by eeyore on Apr 1, 2020 15:59:01 GMT
The property is rented by the local authority. There is massive demand for social housing in the area so extremely likely the lease will be renewed by the LA if higher rent not achieved elsewhere. Is the tenant owned/operated by the local authority? My reading of the loan proposal was that the tenant is a commercial operation whose client is the local authority. When it comes to lease renewal, our borrower is negotiating with the tenant not the local authority, even though the funds orginate from the local authority.
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Post by uksoul on Apr 1, 2020 16:27:41 GMT
The property is rented by the local authority. There is massive demand for social housing in the area so extremely likely the lease will be renewed by the LA if higher rent not achieved elsewhere. Is the tenant owned/operated by the local authority? My reading of the loan proposal was that the tenant is a commercial operation whose client is the local authority. When it comes to lease renewal, our borrower is negotiating with the tenant not the local authority, even though the funds orginate from the local authority. you are right, tenant's client is the LA. The tenant has an established record working with the LA.
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Post by uksoul on Oct 25, 2021 8:06:25 GMT
Repaid today  |
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