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Post by savingstream on Mar 20, 2014 12:33:48 GMT
Superyacht Loan Options
As the Superyacht loan has entered the last 2 months of its term, we are looking at possible scenarios concerning its repayment.
Option 1) The customer may repay the loan in full before the term end, the HNWI would be repaid and the fixed and floating charge over Lendy Ltd is removed.
Option 2) The customer may express his wish to repay the interest only on the loan and renew it for a further 6 months.
a) The HNWI who funded this loan has confirmed that he is willing to renew this facility, however the floating charge would obviously continue in place for the duration of the loan.
b) Lendy would prefer to fund this renewal through the Saving Stream platform in order to repay the HNWI and remove the floating charge over Lendy Ltd.
We would like to know what Saving Stream's investors views were on option b) and if there would be the volume of funding available to make this a viable concept.
Details regarding the security offered:
The Superyacht is secured in a European marina.
The Superyacht has been independently valued by a qualified & indemnified marine surveyor to have a value of £4,666,000. The loan is for £664,000 (LTV 14%).
The vessel is registered in the Cook Islands and the lender has a marine mortgage charge registered against it with the Cook Islands registry.
The vessel is owned by an Isle of Man company and the lender has a debenture over this parent company in the Isle of Man.
Lendy has had legal opinions on the security of this asset from 4 law firms in the UK, IoM, Cook Islands and the country where the asset is secured.
The vessel's insurance policy notes the lender as 'First loss payee'.
In the event of a renewal, the borrower would pay the following costs up front. 6m insurance, 6m mooring fees and 6m crew costs, any upkeep and maintenance costs would fall to the borrower also.
We very much welcome your input on this topic.
(The above information will be sent to all SS investors in due course but we wanted to gauge forum feedback first).
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shimself
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Post by shimself on Mar 20, 2014 14:51:27 GMT
Given that this is may be too big a leap for SS at the present time is there an option 3 where you are able to refuse the extension?
I assume it's the normal 12% deal
I assume your 4 lawyers are all saying the same thing, that it's secure?
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ramblin rose
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Post by ramblin rose on Mar 20, 2014 15:09:26 GMT
If Lendy isn't in a position to underwrite the whole loan themselves until such time as the loan is eventually taken up by lenders, is there any sort of half-way-house, whereby HNWI underwrites part of the loan and the rest of it gets put up via SS? Could HNWI be offered some other inducement to participate in a large portion of the loan, other than the fixed and floating charge?
I would think you'll get better answers on this one via private communication - people with large amounts to lend aren't likely to want to publicise themselves here I'd have thought.
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Post by mrclondon on Mar 20, 2014 18:15:40 GMT
Given the reasonable liquidity in the P2P market, it would be a shame to not at least attempt to make option b work. As you will no doubt be aware FS are attemptng to raise £600k currently, and are approaching 66% filled with 1 underwriter currently in place. The underlying security of both that loan and your superyacht are a similiar LTV, both are outside the UK but in Europe, Both would have a very small potential market if a sale was required, and in both cases the low LTV could cause legal issues for the platform if a firesale resulted in a significantly below valuation return.
At present the existing lender has a debenture and marine mortgage (in addition to the legal charge on yourselves). Presumably Lendy Ltd would be seeking equivalent if SS funding was raised ?
However, without (some) underwriting it will very likely be a lost cause, as even some Assetz Capital loans at that size require underwriting. The question is do you know enough HNW individuals who could be called upon to contribute to an underwriting pot ?
Getting a better take up by your existing lenders will probably require you to sacrifice a bit of your take, to say offer 18% (which is a more typical return for bridging loans in the UK than your normal 12%) . And critical to increased take up by medium sized lenders will be a secondary market through which exposure could possibly be reduced. [The AC aftermarket achives this as small investors can prioritise buying parts from other small investors over those from the underwriters].
Would I be willing to participate in what would be my first SS loan ? Yes, but the amount would be subject to the rate and secondary market availability / fee structure.
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mikes1531
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Post by mikes1531 on Mar 20, 2014 22:01:30 GMT
Given the reasonable liquidity in the P2P market, it would be a shame to not at least attempt to make option b work. As you will no doubt be aware FS are attemptng to raise £600k currently, and are approaching 66% filled with 1 underwriter currently in place. The underlying security of both that loan and your superyacht are a similiar LTV, both are outside the UK but in Europe, Both would have a very small potential market if a sale was required, and in both cases the low LTV could cause legal issues for the platform if a firesale resulted in a significantly below valuation return. At present the existing lender has a debenture and marine mortgage (in addition to the legal charge on yourselves). Presumably Lendy Ltd would be seeking equivalent if SS funding was raised ? However, without (some) underwriting it will very likely be a lost cause, as even some Assetz Capital loans at that size require underwriting. The question is do you know enough HNW individuals who could be called upon to contribute to an underwriting pot ? Getting a better take up by your existing lenders will probably require you to sacrifice a bit of your take, to say offer 18% (which is a more typical return for bridging loans in the UK than your normal 12%) . And critical to increased take up by medium sized lenders will be a secondary market through which exposure could possibly be reduced. [The AC aftermarket achives this as small investors can prioritise buying parts from other small investors over those from the underwriters]. I'd be willing to put more into this loan than I have into other SS loans, but it still wouldn't make a noticeable dent in the total required, and the total funding required is many times more than SS have ever tried before, so I expect underwriting would be required. Whether SS could get that more cheaply than the current agreement with the current lender is a good question. Why does SS want to change the current arrangement? Releasing the fixed and floating charge would be a big positive for them. If they could get the funding from their smaller lenders it would strengthen the platform. Perhaps they're paying the existing lender more than 12%? If they aren't, then I'd be surprised if they'd be willing to offer us a much higher return. (But I note that FS are offering 13% on the book loan and it's struggling to fill.) With respect to the comparison between this loan and the FS book loan, one significant difference strikes me, and that is the fact that if a default occurred and a firesale was required, it wouldn't be necessary to sell the book collection in one go. If it were me, I'd offer for sale only enough books to repay the debt. I think that significantly would reduce the likelihood and the legal complications of a potential claim of a below valuation return. The yacht is a very different 'all-or-nothing' situation.
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Post by savingstream on Mar 21, 2014 11:43:50 GMT
Investors can now indicate their investment interest in large loans (such as the potential Superyacht loan renewal) via a new 'Pre-bidding' feature we have added to the SS platform.
Pre-bidding is the process of indicating interest in upcoming loans without having to financially commit funds to the loan (has also been known as shadow bidding).
This gives an indication of how likely it is that large loans will be funded.
Pre-bids for the Superyacht loan renewal can now be accessed from the menu once logged in to the platform.
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Post by savingstream on Mar 21, 2014 16:42:14 GMT
Thanks for everyone's salient points regarding this loan renewal.
Lenders are not contractually committed to their pre-bid. It is aimed at measuring the level of investment interest in a loan prior to it going live.
Pre-bids will not be reserved or placed when the loan goes live. With the level of underwriting probably involved, we foresee no shortage of availability.
If the renewal can take place through SS, Lendy will benefit from having the charge lifted, however SS investors will also benefit from having this charge lifted. At present, should Lendy Ltd fail for whatever reason, the charge holder would be in a stronger position than Saving Stream investors. So it is advantageous to both Lendy and Saving Stream investors to attempt to remove the charge.
Lendy Ltd intends to launch a Saving Stream secondary market in the next 4-6 weeks to provide more liquidity to our investors.
Lendy is currently in talks at the moment with several parties regarding underwriting any remainder of this loan renewal.
Lendy is also considering increasing the rate of return for this loan from 12% to 18% in order to encourage investor buy in.
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Post by marek63 on Mar 22, 2014 3:00:41 GMT
15% is a better reflection of risk/reward I would suggest - and a secondary market would make this a lot more attractive to HNWI as it remains a concentrated and illiquid security.
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Post by savingstream on Mar 22, 2014 9:27:16 GMT
If SS funds the renewal then the initial HNWI who funded the loan would be paid off and the charge would be removed. One question if I may - The current situation on the SS platform is that committed funds earn interest from day one, which has always made me curious as to when funds are actually drawn down and paid out to the borrower, plus what affect that might have if a proposal took several days or weeks to complete. Unless a large proportion of funds are underwritten beforehand, this loan might take some time to fill in it's entirety, so can you please explain your strategy for this and any other SS loan, and the rationale behind it. Lendy underwrites 100% of the loans initially, so borrower have access to funds quickly. Lendy then recapitalises by offering these loans for investment on the SS platform. This is why investors can earn interest from the day they invest. |
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ramblin rose
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Post by ramblin rose on Mar 22, 2014 15:59:43 GMT
15% is a better reflection of risk/reward I would suggest - and a secondary market would make this a lot more attractive to HNWI as it remains a concentrated and illiquid security. ? ? ? Well I preferred the sound of 18%, but each to his own  At 18% I might consider selling shares to participate but at 15% probably not. I agree with MONEY that I probably wouldn't make a shadow bid unless I had a bit more certainty on the interest rate.
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Post by mrclondon on Mar 22, 2014 22:15:05 GMT
15% is a better reflection of risk/reward I would suggest Sorry to disagree, but 15% pa is readily available on bridging loans secured against readily marketable UK property and land with a monthly interest stream. Three examples from Assetz Capital over recent months (Upton on Severn 75% LTV 1st charge on UK residential property; Spondon 60% LTV 1st charge on UK land with expired planning; South Manchester 75% LTV 2nd charge on UK residental property). 18-20% is a more realistic return for a niche market asset that is not in UK (which may, or may not, even be in the EU) with interest rolled up to maturity. I'm not convinced in the case of the superyacht the difference between 14% and 60% LTV should actually affect the risk pricing given the very small potential market. SS need to attract a number of lenders willing to commit 5 figure sums to this loan. That task becomes seriously hard work if the stated return does not reflect the fact that the risk IS greater than a 6 month bridging loan secured on UK property and land. savingstream - as others have posted earlier, I will only add my pre-bid once you declare your hand on the rate as it will make a very large difference to the amount I'm prepared to commit.
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andy2001
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Post by andy2001 on Mar 22, 2014 22:30:09 GMT
I put a small amount into SS early, and have not added to it for some time, but if this loan offers 18% I expect I will be bidding on it.
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Post by marek63 on Mar 23, 2014 7:09:47 GMT
15% is a better reflection of risk/reward I would suggest Sorry to disagree, but 15% pa is readily available on bridging loans secured against readily marketable UK property and land with a monthly interest stream. Three examples from Assetz Capital over recent months (Upton on Severn 75% LTV 1st charge on UK residential property; Spondon 60% LTV 1st charge on UK land with expired planning; South Manchester 75% LTV 2nd charge on UK residental property). 18-20% is a more realistic return for a niche market asset that is not in UK (which may, or may not, even be in the EU) with interest rolled up to maturity. I'm not convinced in the case of the superyacht the difference between 14% and 60% LTV should actually affect the risk pricing given the very small potential market. SS need to attract a number of lenders willing to commit 5 figure sums to this loan. That task becomes seriously hard work if the stated return does not reflect the fact that the risk IS greater than a 6 month bridging loan secured on UK property and land. savingstream - as others have posted earlier, I will only add my pre-bid once you declare your hand on the rate as it will make a very large difference to the amount I'm prepared to commit. Mea culpa I should have put "AT LEAST 15%" in my original post- as I was still reading that 12% was an option... And I would still rather have 15% with interest running from day 1 than a 'possible' 18% that ties up funds until documentation appears as in some other platforms. Of course I am not saying No to 18%  .
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j
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Post by j on Mar 23, 2014 9:16:12 GMT
Sorry to disagree, but 15% pa is readily available on bridging loans secured against readily marketable UK property and land with a monthly interest stream. Three examples from Assetz Capital over recent months (Upton on Severn 75% LTV 1st charge on UK residential property; Spondon 60% LTV 1st charge on UK land with expired planning; South Manchester 75% LTV 2nd charge on UK residental property). 18-20% is a more realistic return for a niche market asset that is not in UK (which may, or may not, even be in the EU) with interest rolled up to maturity. I'm not convinced in the case of the superyacht the difference between 14% and 60% LTV should actually affect the risk pricing given the very small potential market. SS need to attract a number of lenders willing to commit 5 figure sums to this loan. That task becomes seriously hard work if the stated return does not reflect the fact that the risk IS greater than a 6 month bridging loan secured on UK property and land. savingstream - as others have posted earlier, I will only add my pre-bid once you declare your hand on the rate as it will make a very large difference to the amount I'm prepared to commit. Mea culpa I should have put "AT LEAST 15%" in my original post- as I was still reading that 12% was an option... And I would still rather have 15% with interest running from day 1 than a 'possible' 18% that ties up funds until documentation appears as in some other platforms. Of course I am not saying No to 18% . Some very good & valid points. Being new to SS, I would be reluctant to put money in @ such low rates (one can easily get 12% returns on loans secured on UK bricks & mortar, with interest paid monthly to boot) within such a niche market. Some of the points raised by mrclondon visit always make me a bit apprehensive to take a risk at such low levels. My entry level would be 18-20%, with a preference for the latter. Once SS prove themselves over time then that rate can be negotiated. A number of much more established p2p platforms started at such rates & now offer lower rates, but they have built goodwill history to back that up.
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Post by savingstream on May 9, 2014 5:08:54 GMT
The superyacht loan has now been repaid in full and the lenders solicitors have been instructed to remove the fixed and floating charge from Lendy ltd. This may take a few days to process but a communication email will go out once this has been confirmed. We are very pleased about the development.
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At 18% I might consider selling shares to participate but at 15% probably not. I agree with MONEY that I probably wouldn't make a shadow bid unless I had a bit more certainty on the interest rate.
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