Pipeline Loans

Huddersfield Block A now has a number - PBL135 - still showing Stage 2 though

<EDIT> Go live email just received for tomorrow - Saturday 17th

Not received an email yet.

I assume that this is the loan that is currently on MT.  MT have just issued an email saying that the loan is moving because "... it would be in the borrower’s best interests to refinance the loan with an alternative finance provider who would be able to fund the entire development."  Although they had good appetite for the loan it would have created a concentration risk.

MT say that they expect the loan to be repaid on their platform on Monday 19th Sept, so that would indicate an imminent launch on SS.

savingstream:  While you're at it, I'm a bit concerned with the LTV and how this is affected by the deposits paid.

The way I read it (and please correct me if I'm wrong), prospective purchasers have already provided substantial deposits of £1.34m which are secured against the build.  This has been allowed for in the valuation by deducting this amount from the land value.

Let's assume that the figures in the 'purpose of borrowing' section are correct.  The loan to be provided by SS is £4.166m and the land only valuation after deducting the deposits is £6.2295m.

This is being presented by SS as a first charge loan with a LTV of 67%.

But I don't think it is.

The purchasers are effectively lending the borrower £1.34m on a first charge basis, so let's add this back in to the valuation.

The total loan is £4.166m + £1.34m = £5.506m and the land only value is £6.2295m + £1.34m = £7.5695m.

So really this is a 73% LTV on a SECOND charge basis with SS providing the tranche from 18% - 73%.

Is my understanding correct?  If so, this doesn't look as attractive. (Of course it will look a lot better if the loan to be provided by SS is actually £3.4m instead.)

It's a residual valuation which works back from GDV plus ground rents. Standard method for development projects but you're right that the value doesn't exist until completion/progress made. However not an error in itself. Main difference is the build cost appears to have decreased by 2mil though I haven't had chance to do a direct comparison between the 2 VR. GDV seem broadly similar

Edit had bit more of detailed look. GDV for SS £1m higher because based on actual sales data not predictions, latest phase realising higher prices due to demand (+£5k per unit).
GR increased from £250 to £300 per unit & 4% yield (3.5% in MT) extra 600k as result
MT 9m build cost + 500k S106 contribution, SS £7.5m, no S106. MT 20% developer profit, SS 15% profit

So variations in cost, profit and higher initial GDV results in much better residual for SS.

Should also be noted that VR give very different sizes for build

Small patch of Japanese knotweed

Well, that ought to help the BH's.

I find it interesting that the maximum allocation for PBL135 today was smaller than the allocation for PBL133, even though it was a larger loan.  I wonder what that'll mean for Cardiff.  Do we know what the maximum allocation for PBL131 was?  I saw one comment about it being at least £7k, but it probably was much larger than that.  (Has anyone heard from Investor lately?  I really miss his updates to his first post pre-funding thread.)

I suspect the Cardiff maximum will be similar to PBL131.  It's a slightly smaller loan than PBL131, but with SS having funded over £10M of loans in the last couple of weeks their investors may have a bit smaller appetite on Monday, especially if -- as I suspect -- the SM may be a bit clogged for a little while so that people can't clear their negative balances by selling parts as easily as they could have of late.

If the first tranche is >£4m then I think you might be pleasantly surprised how much you can get.