1000150 - 8th P* loan (ABL)

68% LTV 2nd charge

Existing 50% LTV Ist charge.

Have not had time to check out how the Pea Won £1m first loss works.

Yes, these flats would have to sell for a high price in order to be able to pay back lenders.

The Savills report suggests that they believe the five flats will sell for £7.7m in total. This is a posh part of the world and I've seen in the Harry Redknapp ITV documentaries etc. that properties around there are often worth many millions each.

The £1 million first loss for P1 is a chunky sum and gives me comfort.

I'm going to for a decent slice of this, but not too much as already invested quite a bit with P1's loans.

Has anyone read the full details.

I am trying to understand, if the existing site including part construction is to be  bought for £3m, that is the current security value. 

The completed security will be either £6.5m or £7.7m.

The first charge is £3.94m.

Ablrate charge is £0.5m of PIs £1.5m, to be made in tranches.

Has the borrower already drawn down any of the first charge loan, or do they draw down partial amounts from 1st & 2nd  charges as they build ?

Somewhere along the line surely the total draw downs will not exceed £3m, otherwise there would be a negative security.

Site is being purchased for £3m; £1.5m from first charge holder and £1.5m from Pea One (don't think we're supposed to name the borrower explicitly) of which £0.5m is from Ablrate. So, a 66.7% LTV for us at drawdown (100% for PeaOne).

As with all property developments the LTV between then and the LTGDV at completion is somewhat nebulous, and could easily be greater than 100% at times. During the development tranche drawdowns will be controlled by a Monitoring Surveyor,  who will check that previous drawdowns have been spent wisely and added value. The fact that our borrower has £1m to lose before we do gives them a very large incentive to monitor things closely. 

I note some negative chat on DD central, but prefer to look at the figures.

Pea Won are probably prepared to loan initially up to 100% LTV on this project, because they believe the borrower paid less than what the development is worth. After all who buys a partially started development at full price;  from what I have seen, around  60% to 80%.

I have no details of how much of the development groundwork has already been carried out, but it appears the substructures are in.

The building cost from scratch on high spec is likely to be around £300  per sqft. 4 dwellings, 7052 sqft therefore costs £2.1m.

Add £2.1m to cost of existing development, £3m   = £5.1m (Less substructure cost). Sales  £6.5m.

Finance costs could hit £1m though.
 
Reasonable, as substructure is complete, but helpful if another dwelling gets planning. Substructure work usually equates to 25% of total cost though &  that has been done on the 4 dwellings. That means at least £0.5m has been spent on construction works already.

Total loans available £5.44m, should include for 5th dwelling 1300sqft @ £300, £0.4m.

So with 5 dwellings £5.5m borrowings, £1m finance. £6.5m cost. Sales £7.8m. That's better, especially if £0.5m has already been spent on substructures. Could the be a £1.8m profit, if only £5m of the total loan is required to complete.

Edit. I had not realised the amount of superstructure work that had been done on the 4 dwellings, so rather more than £0.5m has already been spent, if only the 4 dwellings are completed.