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Post by savingstream on Mar 17, 2016 11:54:38 GMT
Should the planning fail (it won't), Unit 3 it has a tenant in place who is willing to sign a 15+ year lease at the current rent which firms up the valuation even further.
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Post by savingstream on Mar 17, 2016 12:04:56 GMT
I'll add a longer post on these loans later, but in the meantime a question for savingstream - have your legal team had sight of detailed land contamination surveys given the site used to be an asbestos factory ? Yes, they are happy that it has been rectified.
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Post by mrclondon on Mar 17, 2016 12:07:27 GMT
To reinforce what adrianc has said, this simply isn't a residential area and is compounded by having no public transport (hence the comment that the borrower will subsidise a bus service whilst he sells the converted units).
Tolpits Lane is a narrow, bendy, fast road with no pavement and no grass verge. It is too dangerous to walk along. How are the kids going to get to school ? How are mums pushing prams going to get to the health centre and the shops ? At one time there used to be a cut through from this business park to the adjacent one that does have a weekday office hours only bus service but that has been fenced off now. There is a muddy unlit footpath across the neighbouring heath to reach that service on Hatters Lane.
How do I know all this ? Well until my retirement last April, I worked for the seller of Unit 4, and although I was based in head office in central London, I managed staff on the 2nd floor of unit 4 (and attended meetings there as rarely as possible !). And here's the rub, the location doesn't really work as office accommodation either. The plan was to fill the whole of the 1st floor with new IT graduates ... but given the absence of public transport recruitment was close to impossible. New graduates from London universities generally do not own cars, and would far prefer to fill vacancies in central London.
Whilst the permitted development rights conversion of unwanted office blocks was / is a visionary scheme, not all offices are appropriate for residential conversion.
Shortly before my retirement, my employer announced that contracts had been exchanged for the sale of unit 4, with completion Q1 2016, with the intention of merging that office with the central London office in a new location in central London. The search for suitable premises is ongoing, but it is not sensible to expect them to remain as tenants of the new owner of unit 4 beyond the short term.
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Post by mrclondon on Mar 17, 2016 12:22:20 GMT
yet again people are over thinking this. We only need to know how long the loan is for and will the value of the property be the same or higher at the end of the loan period. I don't care about developers plans or asbestos etc They have no bearing on the loan or current valuation. At this rate most of you will be talking yourselves out of every loam that appears. You are getting 12% interest and for that you do have to accept some risks
Sorry, I have to disagree as such factors impinge on an exit strategy to redeem this loan. Suppose the borrower has been struggling to obtain finance for these loans because banks will not lend against land with even the slightest possibility of contamination. [The plan to demolish the units that was withdrawn was severely mis-guided in this regard].
Such factors may not directly affect current valuation, but they do affect ease of obtaining finance in the future.
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Post by Deleted on Mar 17, 2016 12:48:54 GMT
Seems to be a lot of unanswered questions about this loan.
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dovap
Member of DD Central
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Post by dovap on Mar 17, 2016 13:03:02 GMT
Damn those people and their thinking/consideration
Much better to plough blindly in.
oh dear
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Post by trentenders on Mar 17, 2016 13:03:12 GMT
Should the planning fail (it won't), Unit 3 it has a tenant in place who is willing to sign a 15+ year lease at the current rent which firms up the valuation even further. "It won't"? Or would you simply be very surprised if it does? The former appears to be a guarantee on which investors may rely...
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Post by savingstream on Mar 17, 2016 13:31:06 GMT
Should the planning fail (it won't), Unit 3 it has a tenant in place who is willing to sign a 15+ year lease at the current rent which firms up the valuation even further. "It won't"? Or would you simply be very surprised if it does? The former appears to be a guarantee on which investors may rely... No, it already has PDR rights for resi so our comment was in relation to that element. Take away the RCs in latest 2 years or probably within 3 months, the value immediately goes north of £10m. Add in an increase of units to the scheme via planning (every indication is positive) then the value increases further.
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brin
I am trying to stay calm.
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Post by brin on Mar 17, 2016 13:37:17 GMT
Damn those people and their thinking/consideration Much better to plough blindly in. oh dear thankyou for that, i thought i was the only one with that strategy 
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geoff
Member of DD Central
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Post by geoff on Mar 17, 2016 13:40:52 GMT
What's a few million between friends?! Is this an unfortunate typo, or am I missing something?
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Post by carbonr1 on Mar 17, 2016 13:42:53 GMT
there are tow companies registered at unit 3, The r**** f*** s**** limited, company which has been dormant since it incorporation 10 Aug 2012 and R**** L**** Limited, company incorporated 12 July 2010, as far as i can see it is a charity that relies heavily on Education funding agency, As well all know govermany funding can be cut overnight, they may want to sign a 15 year lease but will policy changes keep them funded for the next 15 years? Edit: Modded to redact company names as they have the potential to identify the site/ borrower. star dust |
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SteveT
Member of DD Central
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Post by SteveT on Mar 17, 2016 13:50:48 GMT
carbonr1, I don't believe you should be naming tenants openly on this (public) forum, any more than borrowers. To answer your point, a Free School is, legally speaking, operating under the same funding arrangements as any other Academy. This week the Govt have announced that all schools will convert to Academies. There is no realistic risk that funding for a Free School would be withdrawn.
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Post by highlandtiger on Mar 17, 2016 13:53:47 GMT
there are tow companies registered at unit 3, The r***** f***s***** limited, companywhich has been dormant since it incorporation 10 Aug 2012 and R***** L**** Limited, company incorporated 12 July 2010, as far as i can see it is a charity that relies heavily on Education funding agency, As well all know govermany funding can be cut overnight, they may want to sign a 15 year lease but will policy changes keep them funded for the next 15 years? If the loan was for 15 years you might have a point but the chances that funding will be refused sometime in the next few years is negligible. Why worry about something that does not affect the loan Edit: Post edited to redact company information in carbonr1's quoted post. star dust
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Post by Deleted on Mar 17, 2016 13:57:54 GMT
A couple of questions :
The valuation document for unit 3 gives a value of of £8.8m, however there is no mention of restrictive covenants, do we therefore need to take off 20% for the restrictive covenants i.e £7m, which gives an LTV of 88%.
Which brings me back to a previous question, why has the loan amount risen from £5m to £6.2m on unit 3.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Mar 17, 2016 16:04:46 GMT
A couple of questions : The valuation document for unit 3 gives a value of of £8.8m, however there is no mention of restrictive covenants, do we therefore need to take off 20% for the restrictive covenants i.e £7m, which gives an LTV of 88%. Which brings me back to a previous question, why has the loan amount risen from £5m to £6.2m on unit 3. As things stand, 88% would be the best case scenario. No 90 or 180 market day valuation is given, but it's not going to be attractive....... Besides that; the value of the security is a valid exit strategy. I prefer to see some of the loan held back until the restrictive covenants were removed; in which case this would not be an unattractive investment. I do understand people's concerns about the developers plans, but that would be for a DFL; for these PBLs, surely it is the security that is key, not the borrowers own strategy. It's a short-term funding to the borrower until they can find long-term finance.
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