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Post by takeshi on Mar 23, 2016 14:18:03 GMT
Have you see the location? I can not see how that would be valued at 4 million. for the commercial unit - 975K valuation, annual rent 45K I'm no expert but aren't rental rates of return usually around 10% not 4.5%? Plus - as pointed out in the Q&A's :- - who wants a 1 million pound flat above a burger joint? - the valuation has increased 50% in a year, really?
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am
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Post by am on Mar 23, 2016 14:35:09 GMT
Have you see the location? I can not see how that would be valued at 4 million. for the commercial unit - 975K valuation, annual rent 45K I'm no expert but aren't rental rates of return usually around 10% not 4.5%? Plus - as pointed out in the Q&A's :- - who wants a 1 million pound flat above a burger joint? - the valuation has increased 50% in a year, really? 1) Commercial property valuations (as seen at AC, SS or MT) seem to work on gross yields of 7% or 8%. (So £600k to £700k.) 2) BTL yields are reported to be lower in London, and the same might hold for commercial yields. 3) But the value does seem "generous". Even if valid, I'd worry about the beta on London property prices. And the increase in valuation does make me nervous. In fact it's focussed my mind on the lack of valuation reports from FC.
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blender
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Post by blender on Mar 23, 2016 16:07:13 GMT
No thanks! For that to flip at par our Autobidder would have to select the advanced options and deliberately set the buying rate for A loans below the default. The only way to flip would be to discount it to give a buyer rate of 9%, the normal minimum for an A SME loan. I've grown too fat and lazy for that.
8% for an A loan and FC give away the fee? A nephew perhaps, or the project will not stand the right interest rate and FC are too far in.
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am
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Post by am on Mar 23, 2016 16:23:58 GMT
No thanks! For that to flip at par our Autobidder would have to select the advanced options and deliberately set the buying rate for A loans below the default. The only way to flip would be to discount it to give a buyer rate of 9%, the normal minimum for an A SME loan. I've grown too fat and lazy for that. 8% for an A loan and FC give away the fee? A nephew perhaps, or the project will not stand the right interest rate and FC are too far in. Refinance of A+ property development loans as 8% A bridging loans seems to be standard practice at FC, even if it is dirt cheap compared to bridging loan rates elsewhere.
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mikeh
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Post by mikeh on Mar 23, 2016 16:35:34 GMT
Just noticed that Property Development In London E8 2NP 5 Property and Construction - 21492 is now showing 2% CB though the icon is still for 1 % That's more like it. Now where is my debit card? That was my first reaction. It's still an A though. Not worth flipping is it? Edit: sorry didn't see other posts.
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blender
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Post by blender on Mar 23, 2016 16:42:24 GMT
No thanks! For that to flip at par our Autobidder would have to select the advanced options and deliberately set the buying rate for A loans below the default. The only way to flip would be to discount it to give a buyer rate of 9%, the normal minimum for an A SME loan. I've grown too fat and lazy for that. 8% for an A loan and FC give away the fee? A nephew perhaps, or the project will not stand the right interest rate and FC are too far in. Refinance of A+ property development loans as 8% A bridging loans seems to be standard practice at FC, even if it is dirt cheap compared to bridging loan rates elsewhere. Rather too keen to keep the project in the loan book; to keep that loan book growing. The old-timers can at least stand aside and allow others to experience the joys of cash back. Something to keep at least three tongue's lengths away. (I worked hard on that apostrophe and plural).
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nick
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Post by nick on Mar 23, 2016 18:38:17 GMT
I'm not planning on holding it long enough to test out the valuer's accuracy!  I distinctly remember flipping this one first time around too. Yes, but keep in mind that this one is A not A+. Will it flip at 8%? The previous tranche, 21294, isn't flipping at par and is currently trading slow at at a -0.8% discount. I admit I didn't notice it was only an A and not A+ until after I bid - serves me right for being blinded by the return of cash back! I'm probably going to have to discount at more than 1% to reduce my position to comfortable levels and hold the rest to maturity 
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bigfoot12
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Post by bigfoot12 on Mar 24, 2016 8:10:18 GMT
Refinance of A+ property development loans as 8% A bridging loans seems to be standard practice at FC, even if it is dirt cheap compared to bridging loan rates elsewhere. Why, in general and in this case in particular, would a completed project have a worse risk rating? Surely once the project is finished it is less risky? I know that bridging finance has high rates, but that is in part to capture the high costs for a short time which is not the case here as security is already held.
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am
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Post by am on Mar 24, 2016 9:33:20 GMT
Refinance of A+ property development loans as 8% A bridging loans seems to be standard practice at FC, even if it is dirt cheap compared to bridging loan rates elsewhere. Why, in general and in this case in particular, would a completed project have a worse risk rating? Surely once the project is finished it is less risky? I know that bridging finance has high rates, but that is in part to capture the high costs for a short time which is not the case here as security is already held. In this case in particular the amount of the lender's exposure is greater. This is supposedly mostly offset by the increase in the valuation of the property, which some of us are reluctant to accept at face value. One might also argue that failure to sell the project in the planned timescales indicates a misjudgement of the market, and hence of the original risk. (I don't know offhand whether the overrun was in the development phase or the marketing phase.) In general a bridging loan to cover an extended marketing period for a residential property development is probably pretty low risk, and if FC's cost base allows them to undercut the competition then why not. (I'm not rejecting 8% bridges out of hand.) But if the risk on the loan is such as to justify an 8% interest rate then they really ought to be listed as A+ rather than A.
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jamesc
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Post by jamesc on Apr 15, 2016 11:45:18 GMT
Can anyone tell me because I am very confused why anyone wants to buy Croydon at 1% premium 6 weeks to run with an adjusted yield of 4.5% ?
Given the recent well publicised over run of several property loans there is a good chance of these two big loans wont repay on time. Ok a chance will repay early but more lightly repay late and given lack of FC penalty interest just cannot see why the demand ?
Anyone any thoughts would be greatly appreciated.
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am
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Post by am on Apr 15, 2016 12:30:59 GMT
Can anyone tell me because I am very confused why anyone wants to buy Croydon at 1% premium 6 weeks to run with an adjusted yield of 4.5% ?
Given the recent well publicised over run of several property loans there is a good chance of these two big loans wont repay on time. Ok a chance will repay early but more lightly repay late and given lack of FC penalty interest just cannot see why the demand ?
Anyone any thoughts would be greatly appreciated. Has anyone actually bought?
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jamesc
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Post by jamesc on Apr 15, 2016 12:44:13 GMT
Yes believe or not actually quite a lot !
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mikeh
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Post by mikeh on Apr 15, 2016 13:01:43 GMT
I put up some 'A' properties at around 9.2% and they went like hotcakes. Surprised me too.
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fasty
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Post by fasty on Apr 15, 2016 13:25:35 GMT
I'm not sure whether Fumbling Circus has recently been joined by a posse of the hard-of-thinking, or whether perhaps the appeal of a shiny iPad is stronger than I imagined. They seem quite prepared to buy ageing or shop-soiled (i.e. previously late) "E" rated loans at equivalent rates as low as 8%, eagerly snapping them up at a 3% premium. I've started to have a moral dilemma about whether I really should be disposing of my unloved junk like this.
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blender
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Post by blender on Apr 15, 2016 13:37:04 GMT
I'm not sure whether Fumbling Circus has recently been joined by a posse of the hard-of-thinking, or whether perhaps the appeal of a shiny iPad is stronger than I imagined. They seem quite prepared to buy ageing or shop-soiled (i.e. previously late) "E" rated loans at equivalent rates as low as 8%, eagerly snapping them up at a 3% premium. I've started to have a moral dilemma about whether I really should be disposing of my unloved junk like this. Courage, Fasty! You must give them the chance to learn from their mistakes. You know that's good for them. Anyway it is FC, not you, who has placed the ipad mist in front of their diligent eyes.
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I distinctly remember flipping this one first time around too.