registerme
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Post by registerme on Mar 24, 2016 17:02:52 GMT
A worthwhile question though, because if it is a development play they may have to break the current commercial lease to get the pub tenant out.
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adrianc
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Post by adrianc on Mar 24, 2016 17:10:29 GMT
A worthwhile question though, because if it is a development play they may have to break the current commercial lease to get the pub tenant out. The valuation does say that they're not giving a vacant possession value, though, and this isn't a DFL.
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registerme
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Post by registerme on Mar 24, 2016 17:13:53 GMT
Agreed. Which means it's just a planning permission play. But why would you tie expensive funds up for an extended period of time (ie not going to break the lease) just on a PP play? So maybe this is the bridge loan to buy the property to get the PP, to be followed up with a subsequent DFL?
Sorry, I don't think I'm being very articulate at the moment.
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Post by brianac on Mar 24, 2016 17:15:36 GMT
A worthwhile question though, because if it is a development play they may have to break the current commercial lease to get the pub tenant out. I figured they'd "sit it out" , there's mention of them going for several pubs, though not specific how many they have so far (unless I missed that part) so it would seem (to me) to be some sort of long term strategy rather than a quick redevolopment and on to the next. With commercial (or even pub) leases, do they have an automatic right to renew? or maybe take a leaf out of the other pub's book, and pay them off - 7.5k in that case iirc on a side note, Highland Tiger, I had you figured out as Scottish? Presume your no longer in that part of Kent though (I also know area fairly well) Brian
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Post by brianac on Mar 24, 2016 17:17:37 GMT
Edit: I appear to have imagined the moustache, damn its good! Well spotted. could be ... :-) Brian
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Post by Deleted on Mar 24, 2016 17:28:36 GMT
So, just to be clear, they don't have planning permission yet? If so, I have loads of safer places to keep my money.  Always worth checking, it's yet another pub (certainly the Emsworth one lacks planning as far as I can see), anyone know if this is sorted? |
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registerme
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Post by registerme on Mar 24, 2016 17:40:33 GMT
The more I look at this the less I understand. The whole valuation doc makes it clear that PP has only "hope value", and yet a significant factor in the valuation figures provided (to be fair, not those used by SS) is based on residential comparisons. Alongside this no mention is made of the annual rent accruing to the owner of the site, which is basically what it's worth as a future stream of cashflows given no PP and continued use as a pub. Perhaps it's just the presentation that is confusing me.
This (from the SS summary page) would seem to be the bottom line:-
"There is no planning permission on the site however there is considerable potential. We are lending on a purely bricks and mortar basis and the 9 year lease in place without any hope of planning value being added".
But then I would like to know how much rent it earns.
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ben
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Post by ben on Mar 24, 2016 18:38:16 GMT
I guess at the moment that is the only thing that matters is how much rent it brings in ie enough to cover interest or not on loan. Even if they want to do something with it eventually it will not be during the duration of this loan, planning permission will take time and they will have to get rid of tenants. So the value of the property with any potential planning permission is pretty irrelevant at moment . How do they plan on repaying the loan?
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ablender
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Post by ablender on Mar 24, 2016 18:41:21 GMT
CD would have started a new thread in parallel so that his analysis was the first post. Could be an upgrade from C(yber)D(yne) Systems T-800 Model 101 to a T-1000 and is adapting its approach to blend in, plus, of course, the inconspicious disguise of a stick on moustache & a very big hat   Edit: I appear to have imagined the moustache, damn its good! Probably due to the extra-wide grin.
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Post by highlandtiger on Mar 24, 2016 20:03:05 GMT
A worthwhile question though, because if it is a development play they may have to break the current commercial lease to get the pub tenant out. I figured they'd "sit it out" , there's mention of them going for several pubs, though not specific how many they have so far (unless I missed that part) so it would seem (to me) to be some sort of long term strategy rather than a quick redevolopment and on to the next. With commercial (or even pub) leases, do they have an automatic right to renew? or maybe take a leaf out of the other pub's book, and pay them off - 7.5k in that case iirc on a side note, Highland Tiger, I had you figured out as Scottish? Presume your no longer in that part of Kent though (I also know area fairly well) Brian First 18 years of my life, in Maidstone, (went to Oakwood Park Grammar, or MSB as it was when i first went there), then a few years travelling the world, then a few years in London, then 10 years in Scotland, then about 10 years back in Maidstone, then another 10 years in Scotland, now currently in the West Country. But I'm still a Kentish man. (not one of those chavvy Men of Kent )
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am
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Post by am on Mar 24, 2016 20:35:34 GMT
I guess at the moment that is the only thing that matters is how much rent it brings in ie enough to cover interest or not on loan. Even if they want to do something with it eventually it will not be during the duration of this loan, planning permission will take time and they will have to get rid of tenants. So the value of the property with any potential planning permission is pretty irrelevant at moment . How do they plan on repaying the loan? According to Saving Stream, as I read it, the exit strategy is to refinance at a lower rate with a mainstream lender - the purpose of the bridging loan being to get quick finance to push the purchase through. So our concern is with the valuation - if it's too high there's a double whammy - they'll have difficulty refinancing, and we'd have difficulty realising the security. The unanswered question is whether the rental income is sufficient to support the valuation (and to cover the interest on a commercial mortgage, but we only care about that to the degree it effects their chances of getting a commercial mortgage).
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registerme
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Post by registerme on Mar 24, 2016 20:38:49 GMT
I've asked SS about the rent. No response as yet.
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ablender
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Post by ablender on Mar 24, 2016 20:42:12 GMT
I guess at the moment that is the only thing that matters is how much rent it brings in ie enough to cover interest or not on loan. Even if they want to do something with it eventually it will not be during the duration of this loan, planning permission will take time and they will have to get rid of tenants. So the value of the property with any potential planning permission is pretty irrelevant at moment . How do they plan on repaying the loan? Do I understand well that your interest in rent amount is to see if it covers the interest?
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Post by brianac on Mar 24, 2016 21:52:10 GMT
But I'm still a Kentish man. (not one of those chavvy Men of Kent ) Makes me a Chav then! :-0 (which is appropriate as the terms <allegedly> derives from near here) Brian
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Post by brianac on Mar 24, 2016 22:20:34 GMT
I guess at the moment that is the only thing that matters is how much rent it brings in ie enough to cover interest or not on loan. Even if they want to do something with it eventually it will not be during the duration of this loan, planning permission will take time and they will have to get rid of tenants. So the value of the property with any potential planning permission is pretty irrelevant at moment . How do they plan on repaying the loan? Do I understand well that your interest in rent amount is to see if it covers the interest? Quote> Our borrowers are very experienced investors who are building a portfolio of similar pubs with planning potential. They are buying this asset out of probate hence the need for rapid, short term finance whilst they arrange longer term funds to be arranged from a high street lender. \Quote> This seems to suggest (to me) a longer term strategy mind, what they say and what they actually intend, and what they actually do .... Probate bit doesn't quite sound right, having handled a couple of them, it's actually quite a slow process, and property tends to spins it out even further I'm slightly concerned by a comment by investibod - "the property is currently owned freehold by the borrower" if he owns the freehold who's died? and why doeshe need to buy it if he already owns it? where does this info come from plse? Brian
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