Pipeline Loans

The Graveyard in the Garden Centre

Nursery to grave...

Strategy and Purpose of Borrowing/ Objective

The purpose of the loan is to purchase the site and offer it as a cemetery, for which there is very strong demand from the local community. Some initial purchases of leases on burial plots have already been agreed.

Each burial plot is priced at £15,000 for a 50 year lease post-burial, with longer leases available. There are c27,000 burial plots over the 22 acres (average site density nationally is 1250 burial plots per acre). The site could potentially generate c£400m of income every 50 years from sales of burial plot leases.

Many individuals pay in advance for a burial plot over the course of the latter half of their lifetimes rather upon death i.e. £100 per month to reserve a specific plot within the cemetery. Many families want to be buried close to each other and will often acquire nearby burial plots for future use.

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The customer is quite confident that he will be able to sell enough plots to generate sufficient capital to repay us within our loan term.
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Quick check for names, locations.... OK

Reads like a fairy story!!!

Yes I know there is a shortage of burial plots, but pleeeease....

Can someone do the maths for me. How many people need to buy a plot... in advance.... to repay the loan?

And the population of the Essex town R******* is???

As an aside, would you pay £100pcm just to reserve a plot?

Selling £400 plots at £15k each would produce £6M of proceeds, which is more than the amount of the loan, though more sales would be required to provide development funding.

Wikipedia says R****** population is 12,500.  I haven't a clue whether there are other cemeteries nearby.  If not, this one could draw business from surrounding communities.

If the alternative is paying out £15k, then £100pcm might be preferable.  (Put the £15k into SS and earn £150pcm of interest!  Unless you're a higher-rate taxpayer, you could pay the tax and still have something left for a beer -- or whatever.)  And if delaying the purchase means the 50-year clock doesn't start running, that could be another advantage.

R******* is part of a borough that has a population in excess of 200k.  It is not very far from the City of London cemetry (6 of which were established in the 19th century) that I believe has plenty of space.  The local churchyards are probably full and their cemetries are likely classified a closed, i.e. no more burials allowed, I am not aware of any other graveyards but there is a very large crematorium close by.

Can not see how any normal cemetery plot can cost £15k  more like £4-5k max

In that area, it wouldn't surprise me at all if the "demographic change" mentioned was related to ethnic and religious origins - large populations of people for whom churchyards would hold little interest, and crematoria even less.