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Post by chris on Jan 21, 2014 15:49:00 GMT
Response from the admin team:
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pikestaff
Member of DD Central
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Post by pikestaff on Jan 22, 2014 8:43:35 GMT
The full credit report is still not posted for K*****minster which is due to start at 16:00 today.
With pre-bids now in place surely the full credit report should be posted at least 24h ahead, otherwise pre-bidders who leave their bids in are liable to be bidding blind.
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Post by chris on Jan 22, 2014 8:54:37 GMT
pikestaff - I have passed your post on to the admin team.
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Post by bracknellboy on Jan 22, 2014 10:21:04 GMT
This is an area which some thought will need to be given to. I like the idea of pre-bids if for no other reason than its an innovation: innovations can always be withdrawn if they don't work out. I also think the issue is probably fairly easily resolved, and would probably fit anyway with AC practise (? - not been active on it long enough to be sure). Namely, that if full reports or any other outstanding documentation is not available for the loan within xx period of the auction start, the auction start will be put back. 24 hours for additional due dil and time to withdraw pre-bids seems reasonable. However, I can see situations where that may not be quite so desirable. e.g. need to quickly fund short term bridging loans: it may well be that many would be fine with participating on short term bridging loans at certain levels of exposure without having full and final documentation. At the moment I suspect AC solve that connundrum by simply getting it all pre-funded.
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Post by chris on Jan 22, 2014 12:11:30 GMT
The full credit report is still not posted for K*****minster which is due to start at 16:00 today. With pre-bids now in place surely the full credit report should be posted at least 24h ahead, otherwise pre-bidders who leave their bids in are liable to be bidding blind. I've now spoken with the admin team and have been told that we'll have the full credit report up on the site today. The start of the auction is being pushed back until Friday in order to give lenders the chance to carry out their due diligence. This will be reflected on the site shortly.
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pikestaff
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Post by pikestaff on Jan 22, 2014 12:22:47 GMT
Thanks, Chris.
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Post by mrclondon on Jan 22, 2014 13:45:23 GMT
Full details of tomorrow morning's boilerman loan are now up. chris could you suggest to the admin team that when the full credit report is uploaded, the loan summary is updated with a note to that effect. Thanks.
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mikes1531
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Post by mikes1531 on Jan 22, 2014 16:18:35 GMT
At the moment I suspect AC solve that connundrum by simply getting it all pre-funded. When you say "pre-funded"... Are you referring to pre-bids? Or underwriting?
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mark
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Post by mark on Jan 22, 2014 21:32:38 GMT
mark - Yes, yes, yes. I'm working hard to get that sorted out ASAP. Four of the troublesome drawdowns came from the same introductory source and we are working hard to resolve why that is. A Thank you for that yes, yes, yes reply. Slighty off topic but would it be possible for you elaborate on your what actions you are actually taking to resolve the troublesome drawdowns that have tied up lenders substantial dead funds for months and how long you intend on allowing these borrowers to continue to do so. As a question, does AC receive interest for these undrawn funds. Over the months we periodically receive update emails that inform that draw down will happen ' in a couple of weeks ' yet we wait months and no progress. Long stop deadlines, extension and penalty fees are mentioned but seem to be just empty words. Beyond update comments such as ' with legals, waiting for an update from the relationship manager, attempting to contact ' I am none the wiser than if I did not receive these updates. I am aware that some delays to drawdown to check security, necessary legal work and requirements is appropriate and acceptable. A period of 4 - 6 weeks should be ample time for this but as we move into the forth month of waiting for drawdown of L*L7, and towards three months for a six month urgent Birm****** bridging loan and other such gems such as the Slo*** loan I am wondering what action, deadlines, withdrawal of loan facility, penalties, you will be applying in trying to sort this out asap. In the end perhaps, as with the pulled loan today, the option to pull the plug on these and allow lenders to reinvest they dead money should be considered
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Post by mead187 on Jan 23, 2014 21:04:31 GMT
It looks like the Kidderminster loan will be fully funded with pre-bids. Will there be an opportunity to bid as of tomorrow? based on the calculated allocation of parts to smaller lenders? I can't remember the in's n out's of the scheme but I remember reading something about it in an Email from Assetz a week or so ago, not sure if it was a suggested or implemented idea (sorry to be vague) Guess I could always wait till tomorrow and find out but I'd rather not transfer funds over unnecessarily. P.S since pre-bidders are clearly flush at the moment, anyone care to lend us a fiver and I'll pay you back in Decembuary?  |
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Post by chris on Jan 23, 2014 21:12:08 GMT
It looks like the Kidderminster loan will be fully funded with pre-bids. Will there be an opportunity to bid as of tomorrow? based on the calculated allocation of parts to smaller lenders? I can't remember the in's n out's of the scheme but I remember reading something about it in an Email from Assetz a week or so ago, not sure if it was a suggested or implemented idea (sorry to be vague) Guess I could always wait till tomorrow and find out but I'd rather not transfer funds over unnecessarily. P.S since pre-bidders are clearly flush at the moment, anyone care to lend us a fiver and I'll pay you back in Decembuary? It was a suggestion at the time that was implemented but hasn't been set live due to mixed feedback from lenders on the idea. With the Kidderminster loan currently £32k of the pre-bids won't convert to bids as the lenders have insufficient funds. So there may be opportunity tomorrow to bid regardless of the loan being 'fully' funded by pre-bids.
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Post by mead187 on Jan 23, 2014 21:27:07 GMT
It looks like the Kidderminster loan will be fully funded with pre-bids. Will there be an opportunity to bid as of tomorrow? based on the calculated allocation of parts to smaller lenders? I can't remember the in's n out's of the scheme but I remember reading something about it in an Email from Assetz a week or so ago, not sure if it was a suggested or implemented idea (sorry to be vague) Guess I could always wait till tomorrow and find out but I'd rather not transfer funds over unnecessarily. P.S since pre-bidders are clearly flush at the moment, anyone care to lend us a fiver and I'll pay you back in Decembuary? It was a suggestion at the time that was implemented but hasn't been set live due to mixed feedback from lenders on the idea. With the Kidderminster loan currently £32k of the pre-bids won't convert to bids as the lenders have insufficient funds. So there may be opportunity tomorrow to bid regardless of the loan being 'fully' funded by pre-bids. Thanks for the speedy response, in that case I'll try and get a bid in early tomorrow morning and see what happens. May have shot myself in the foot by not responding to that feedback Email (can't find it now) Whilst I didn't scrutinise it thoroughly from what I can recall it had some good merits about it, I suspect small active lenders are in the minority on the AC platform.
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Post by mrclondon on Jan 23, 2014 21:28:54 GMT
With the Kidderminster loan currently £32k of the pre-bids won't convert to bids as the lenders have insufficient funds. So there may be opportunity tomorrow to bid regardless of the loan being 'fully' funded by pre-bids. Err, you haven't exactly given us a lot of time to study the documents and decide (in my case) how many of the three pre-bids I placed I'm prepared to fund ... I'm sure I'm not the only one still pondering exactly how much to put in before 9am. That said, I've just asked a question which given I'm unlikely to get an answer before the loan goes live, means I'm likely to scale back my involvement.
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Post by mrclondon on Jan 23, 2014 23:31:36 GMT
The more I think about this Kidderminster proposal the less I like it. If (and its a big if) I have identified the "anonymous" borrower correctly, then the company requesting this loan is one of six set up in the second half of last year with common directors, all with property development sounding names, and some associated with towns that are more prosperous than Kidderminster (and the valuer left no doubt of his opinion of the town on that score).
If (and again its a big if) there is more than one development project running concurrently this year, and there is a resource constraint (time or money) the Kidderminster one could be the one that is allowed to slip. The LTV against the building as it stands looks OK, but could a part completed development actually be worth less than as it stands at present (fire sale conditions) if the building can not be used immediately for its present purpose (office accomodation) or new purpose (1 bed flats) ?
I think I'm going to pull all three pre-bids.
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Post by andrewholgate on Jan 24, 2014 9:45:11 GMT
A lesson in property development structures.
There has been a number of questions around the current Kiddeminster offering and some nervousness created by information found by a number of lenders. What I hope to do here is explain a few principles behind how some property developers work.
Unlike a normal SME business which repeated makes a product or service, a property development is very much a singular project with a clear star and end point. The process starts with acquiring the land and finishes when the doors are opened or the property is sold. In an SME business, the product is created several times over, where as a development is very finite. However there are some similarities in the way a developer may structure his business. To use an example of RBS, in 2007 it had a number of distinct brands - RBS, Direct Line, Churchill, NatWest etc etc. Each of these brands did something different from the other and so they were ringfenced behind their own limited companies. This means that should RBS decide to sell or close a division, as it has done with the sale of Direct Line Group, it can divest that part cleanly. In the same way property developers will do the same.
At the top end of the scale you have master contractors such as Costain. Let's say they get a a huge contract to build HS2. What Costain PLC will do is set up a new company possibly under the name of Costain HS2 Limited that will manage the whole of the HS2 project. Costain will take ownership of that company but the whole project is ringfenced into that company. It stands alone as a business and is seen as an investment by the wider Costain Group. Should that project fail it is the ringfenced business that fails, not the larger Costain business. In the same way, Barratt Homes building houses in North Swindon will set up a Barratt (North Swindon) Limited just for that site, and like wise for other sites around the country. Once the site is complete, the company is wound down and ceases to trade with profits distributed back to the main business. These limited companies are set up for one purpose and are known as Special Purpose Vehicles.
Many smaller developers will do exactly the same. They will set up one SPV to manage one site. The SPV will be given enough equity to start a project and then they will seek a bank or funder to complete the funding to finish it. It is a neat parcel that means should that one project fail, the whole pack of cards does not tumble down. A lender makes a decision based on that particular project on its own as there is no recourse to the other projects unless cross guarantees are put in place.
What lenders have found in regards to the Kiddeminster loan is that the developer has a number of SPVs that cover various projects he is working on. This is a very common practice. The loan should be judged on the performance of the individual SPV and not on the wider projects if there are no cross guarantees or additional charges in place.
Does that make sense?
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