Epping / Ipswich bridges

Kernie - if you feel uncomfortable I think it is probably because you should ! I have sizable parts of both 137 & 129. Loans of the types we invest in can and will go wrong, that is a given. I do feel that we are not being given enough information and updates into what is happening and where in the process we actually are. The LPA has now been working for 'us' for a month and we don't really know what the situation is and how long (and presumably how much £) further we have to go. I think you should probably brace yourself for a loss of some sort on either of these if the numbers look anything like some people have mentioned. Whatever the situation, we, the investors will not feel better with less info. My 2 cents.

These two loans are beginning to get an extremely unhealthy smell about them and with the LTV gap reducing rapidly could produce the first significant default for AC. I get the feeling that AC are not entirely on top of this problem and am also having similar thoughts about other "in trouble" loans.

Sorry should have read .....and the LTV gap reducing rapidly.

The other thought I had but should have mentioned at the time goes something like this. Is AC's team far too focused upon raising money and forming partnerships etc with other businesses/activities? After all there are not a huge number of staff on board at AC and the work load must have risen by several magnitudes in the last few months. No doubt as with all human beings the new stuff usually occupies more attention than the old. Also sorting out failures carries a lot less kudos than getting new projects up and running.

I'm far less pessimistic, there is a lot of asset security here.

You might be interested in a question raised on seedrs yesterday, regarding losses/defaulted loans.
This is an excerpt of the answer from Stuart Law.

"A property loan for £1.9m where a sale of the property has not happened and the borrower has not been co-operative. The LTV is below 70% and a sale of the property will result in full repayment of capital and interest for our lenders."

Hi Merlin

We have a huge team now and only a couple of us on the fund raise and those people don't do credit etc. As i just posted on another thread :

The team is working on this. We have a sister company with a list of student accommodation buyers looking for whole sites so it will be providing some of the interested party bids to whoever handles any potential sale. That business sold c £75m of student accommodation last year so plenty of demand so its just down to price and we will go all out as usual to get full recovery including the accrued interest. This is bridging and it's often a noisy business due to the timing and refinance challenges but security is helpful. We took future interest on account as cash within the original 70% LTV and this was paid to lenders monthly already in cash so it will be the capital and default interest now due from the first charge security and to get all original interest and capital repaid we need just over 60% recovery I estimate - happy to get confirmed but a bit early to make a call ! We had several big name historic valuations on the student accommodation as well the final one we relied upon and the rents look fine at first sight to me (I am a student accomodation investor myself for 10 years). Also 60% is under a nomination agreement to the university and this is normally discounted to market rate. I too am seeking a good recovery as I have some of these too.

stuartassetzcapital:  I'm afraid I don't understand the logic here.  AC report the LTV right now to be 70.64%.  Any recovery below that level -- after all costs and fees -- would mean lenders would not receive their original investment returned from the liquidation proceeds.  It seems rather inappropriate to suggest that the monthly payments made during the first six months of these loans should be recharacterised as a return of capital rather than interest.  And especially so considering that the recipients of those monthly payments might no longer have any investment in these loans because of sales in the Aftermarket. 

Surely AC don't expect that if the recovery is only enough that an investor who was in the loan from the beginning to the end receives back the same amount -- including those monthly payments -- that they initially invested, those investors would consider that to be a full recovery.  If the recovery would be something similar to the rabbit AC pulled out of the hat at FF -- all capital returned, plus interest at the basic rate for the loan (i.e. not including any increased rate as a penalty for the loan being in default) for the entire period that the loan was outstanding, I would be willing to call that a near-full recovery.  Anything less would not qualify for that description.  A proper full recovery would include the extra 'default' interest, especially considering that some current lenders will have bought loan parts on the Aftermarket after the initial term and would have been expecting the 18% rate that the loan was shown as accruing from the time of their purchase until the time their capital is repaid.

@davidricketts1 I appreciate your clarification on this as the waters were becoming a little muddy. Your comment though of "just north of 70%" given the increased rate of interest now accumulating indicates that the LTV gap is closing but at what rate?