dead-money
Rocket to the Moon
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Post by dead-money on Apr 26, 2020 20:11:44 GMT
By my reckoning there are 168 property development loans on AC, currently 12 are in administration / receivership and not at practical completion.
54 are due for completion and repayment within the next three months.
It seems likely that a fair proportion of these will fall into administration.
Looking at those already in receivership the realised capital will likely be 80-90% of the outstanding loan.
But I'd question whether there will be a pool of eager developers ready to take up these opportunities.
And finally where will the house buyers be coming from with 20% of the working population unemployed?
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dave4
Member of DD Central
Cynical is a hobby not a lifestyle
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Post by dave4 on Apr 26, 2020 20:26:36 GMT
Wow had this exact conversation earlier in the week.
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agent69
Member of DD Central
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Post by agent69 on Apr 26, 2020 21:07:16 GMT
Question: who buys a half completed building development
Answer: normally the original developer for about half the original price
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ceejay
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Post by ceejay on Apr 26, 2020 22:14:36 GMT
Two points spring to mind. At the risk of being thought outlandishly optimistic, we are now seeing news that builders are being encouraged to get moving again. So, if they can stay solvent - which for the likes of AC's borrowers probably means access to the rest of their development funding - then finishing the job ought to be possible for many, with the result being no more than a delay of a few months. Of course, you then have to add a little more time especially for residential developments for the market to reappear, which might take a little longer.
Second point: a major driver to how much you might expect to get for a development, whatever its level of completion, is the degree of patience you are prepared to show. It's no accident that valuers will give different valuations depending on the timescale for selling.
That said, there will be some losses for sure. But the degree of our recovery is massively linked to the level of patience which we can exercise - which I appreciate is easier for some than others...
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alanh
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Post by alanh on Apr 27, 2020 9:23:08 GMT
Question: who buys a half completed building development
Answer: normally the original developer for about half the original price
The original developers bid at 50% of the original price is usually the best bid. Not many others are willing to take on a half built development that they have had no involvement in but will ultimately be responsible for unless it is virtually given away.
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dead-money
Rocket to the Moon
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Post by dead-money on Apr 27, 2020 10:55:31 GMT
Two points spring to mind. At the risk of being thought outlandishly optimistic, we are now seeing news that builders are being encouraged to get moving again. So, if they can stay solvent - which for the likes of AC's borrowers probably means access to the rest of their development funding - then finishing the job ought to be possible for many, with the result being no more than a delay of a few months. Of course, you then have to add a little more time especially for residential developments for the market to reappear, which might take a little longer. Second point: a major driver to how much you might expect to get for a development, whatever its level of completion, is the degree of patience you are prepared to show. It's no accident that valuers will give different valuations depending on the timescale for selling. That said, there will be some losses for sure. But the degree of our recovery is massively linked to the level of patience which we can exercise - which I appreciate is easier for some than others...
I believe those which are already in administration or receivership are because the developer became insolvent. So in those cases forebearance on AC's part wasn't the issue, factors beyond AC's tranche funding came into play. Winding-up petitions and disputes with contractors seem to be a common issue.
Whilst patience and forebearance of the loans make sense, new build developments can be time critical; i.e. if plots aren't watertight and weatherproof. Several stalled developments have plots now requiring demolition and rebuild.
Also I'm yet to spot a defaulted development loan which has exited receivership; even years later, so that's a concern!
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