ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 20, 2016 20:16:47 GMT
Good to see you back on the job CD.  Took a look at this one the other week. Notice the residual value after deducting costs and the developers profit is £2.5m, so the £1.75m loan has a 70% LTV However the exit details additionally mention that 'SS investors will receive the completion funds before the borrower receives any profits' and 'after all costs, completion funds will amount to over £6m to cover the £1.75m loan.' Does this effectively mean that the LTV will probably be lower than the 70% stated ? Yes, that is is the way that I read it. If so, in the next 12 months the LTV will in theory decrease as and when deposits are paid (adding to the borrowers completion funds), and backed up by the fact that SS seem to hold priority on any completion funds. If the above is correct, it would make this a safe looking investment There are 38 apartments left to sell (50% deposit) plus the commercial space which will generate £3.2m which will be used to fund the build & the release of which SS will control Have 38 left to sell (@ c£60k 50% deposit - £2.2m) plus commercial space (value £1m) to fund the deal but haven’t yet exchanged
SS will control the flow of exchange funds and will only release them to the borrower on receipt of a satisfactory QS report which will be made visible to SS investors whenever possible.
Once the construction is complete the other 50% payable on all 101 appartments will be recieved totaling c£6m and SS loan will be repaid out of that ( costs covered from previous income) and anything left over will be borrowers profit (not sure if there will be further funds from the commercial units in which case they would cover any further costs)
SS investors will be repaid from completion funds within 12 months.
After all costs, completion funds will amount to over £6m to cover the £1.75m loan.
SS investors will receive the completion funds before the borrower receives any profits.
So basically we arent paying for the construction (so no DFL) thats funded from sales, we're just covering the original site cost and the Chinese Wall deposit. Thats how I read the overview.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Apr 20, 2016 20:23:24 GMT
Yes, that is is the way that I read it. If so, in the next 12 months the LTV will in theory decrease as and when deposits are paid (adding to the borrowers completion funds), and backed up by the fact that SS seem to hold priority on any completion funds. If the above is correct, it would make this a safe looking investment There are 38 apartments left to sell (50% deposit) plus the commercial space which will generate £3.2m which will be used to fund the build & the release of which SS will control Have 38 left to sell (@ c£60k 50% deposit - £2.2m) plus commercial space (value £1m) to fund the deal but haven’t yet exchanged
SS will control the flow of exchange funds and will only release them to the borrower on receipt of a satisfactory QS report which will be made visible to SS investors whenever possible.
Once the construction is complete the other 50% payable on all 101 appartments will be recieved totaling c£6m and SS loan will be repaid out of that ( costs covered from previous income) and anything left over will be borrowers profit (not sure if there will be further funds from the commercial units in which case they would cover any further costs)
SS investors will be repaid from completion funds within 12 months.
After all costs, completion funds will amount to over £6m to cover the £1.75m loan.
SS investors will receive the completion funds before the borrower receives any profits.
So basically we arent paying for the construction (so no DFL) thats funded from sales, we're just covering the original site cost and the Chinese Wall deposit. Thats how I read the overview.Agreed, and I do understand that this is not a DFL (I promise)! I was just talking about the exit strategy in my above post; if we (i.e. SS) have priority access to the completion funds, then the LTV is to decrease as and when the deposits are received. Unless I'm reading the overview wrong.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 20, 2016 20:30:20 GMT
Can any explain how Sefton are the planning authority for a development located well to the south of Liverpool city centre? It isnt, it doesnt appear on the Sefton site but on the Liverpool one, assume its an error in the valaution
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Apr 20, 2016 20:45:21 GMT
So it should  Thanks - Changed it now
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,329
Likes: 11,549
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Post by ilmoro on Apr 20, 2016 20:48:56 GMT
There are 38 apartments left to sell (50% deposit) plus the commercial space which will generate £3.2m which will be used to fund the build & the release of which SS will control Have 38 left to sell (@ c£60k 50% deposit - £2.2m) plus commercial space (value £1m) to fund the deal but haven’t yet exchanged
SS will control the flow of exchange funds and will only release them to the borrower on receipt of a satisfactory QS report which will be made visible to SS investors whenever possible.
Once the construction is complete the other 50% payable on all 101 appartments will be recieved totaling c£6m and SS loan will be repaid out of that ( costs covered from previous income) and anything left over will be borrowers profit (not sure if there will be further funds from the commercial units in which case they would cover any further costs)
SS investors will be repaid from completion funds within 12 months.
After all costs, completion funds will amount to over £6m to cover the £1.75m loan.
SS investors will receive the completion funds before the borrower receives any profits.
So basically we arent paying for the construction (so no DFL) thats funded from sales, we're just covering the original site cost and the Chinese Wall deposit. Thats how I read the overview.Agreed, and I do understand that this is not a DFL (I promise)! I was just talking about the exit strategy in my above post; if we (i.e. SS) have priority access to the completion funds, then the LTV is to decrease as and when the deposits are received. Unless I'm reading the overview wrong. I dont understand the linkage between funds generated by sales & the LTV. The completion funds wont be payable by the appartment buyers until the end of the build so the 6m wont exist during the course of the loan. The deposits on the already sold appartments have been spent/will be spent on contruction, the deposits on the still to be sold apartments will also be spent on construction. While that cash may be sat in a bank account until spent but SS has no call on it unless you include it in the assets of the borrower under the debenture (17M even without it). I assume the LTV will reduce over the lifetime of the loan as the value of the asset increases as construction is carried out. LTV is related to the value of the asset not directly to any cashflows.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Apr 20, 2016 21:00:40 GMT
Agreed, and I do understand that this is not a DFL (I promise)! I was just talking about the exit strategy in my above post; if we (i.e. SS) have priority access to the completion funds, then the LTV is to decrease as and when the deposits are received. Unless I'm reading the overview wrong. I dont understand the linkage between funds generated by sales & the LTV. The completion funds wont be payable by the appartment buyers until the end of the build so the 6m wont exist during the course of the loan. The deposits on the already sold appartments have been spent/will be spent on contruction, the deposits on the still to be sold apartments will also be spent on construction. While that cash may be sat in a bank account until spent but SS has no call on it unless you include it in the assets of the borrower under the debenture (17M even without it). I assume the LTV will reduce over the lifetime of the loan as the value of the asset increases as construction is carried out. LTV is related to the value of the asset not directly to any cashflows. Okay; maybe I'm reading the situation wrong (quite likely  ) Just seems to me that SS in their overview is referring to the future completion funds as part of the security. Anyhow, I bow to your superior wisdom and have edited my OP 
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 20, 2016 21:43:28 GMT
I dont understand the linkage between funds generated by sales & the LTV. The completion funds wont be payable by the appartment buyers until the end of the build so the 6m wont exist during the course of the loan. The deposits on the already sold appartments have been spent/will be spent on contruction, the deposits on the still to be sold apartments will also be spent on construction. While that cash may be sat in a bank account until spent but SS has no call on it unless you include it in the assets of the borrower under the debenture (17M even without it). I assume the LTV will reduce over the lifetime of the loan as the value of the asset increases as construction is carried out. LTV is related to the value of the asset not directly to any cashflows. Okay; maybe I'm reading the situation wrong (quite likely ) Just seems to me that SS in their overview is referring to the future completion funds as part of the security. Anyhow, I bow to your superior wisdom and have edited my OP Wisdom as long as it doesnt involve maths. The priority is nice, wont get stiffed in favour of borrower profits, but I wouldnt base a lending decision on it. Its a lot clearer in the overview for PBL93 exit.
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markdirac
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Post by markdirac on Apr 20, 2016 21:44:50 GMT
Normal cool, try a google search on 'Off Plan' It may be typical, but using deposit money toward the development costs rather than putting it into a client account would appear to put buyers' money at a significant risk. If the project/developer collapses for some reason, where do the buyers come in the creditors' ranking? Is it fair to presume they'd be behind us in the payout queue because we have a registered charge against the property? I do hope so. Perhaps savingstream would care to clarify the situation. Normal cool or not, I wouldn't lend say £100k to a property developer unsecured at 0% for an ill-defined term? Is there really no security for these people? Two details I cannot get my head around at this late (for me) hour: - All these 50% 's represent a significant liability for the developer. I feel this should affect our LTV, but I guess it doesn't 'cos the security against which we are calculating LTV is the first charge, and not the debenture. - If you can convince the sales woman in the shop the hostess in the marketing suite that you are paying with a mortgage, then you don't need to lend the 50% up front (according to our provided info somewhere). So some of our calculations of x * 50% are not quite accurate.
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mikes1531
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Post by mikes1531 on Apr 21, 2016 1:01:51 GMT
- If you can convince the sales woman in the shop the hostess in the marketing suite that you are paying with a mortgage, then you don't need to lend the 50% up front (according to our provided info somewhere). So some of our calculations of x * 50% are not quite accurate. I wasn't aware of that option. I'd have thought that a large proportion of buyers would be using mortgages. If so, and if that means they don't have to make the 50% deposit, then that could leave the developer with a significant shortfall of funds for completing the project.
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Post by Deleted on Apr 21, 2016 7:25:36 GMT
It may be typical, but using deposit money toward the development costs rather than putting it into a client account would appear to put buyers' money at a significant risk. If the project/developer collapses for some reason, where do the buyers come in the creditors' ranking? Is it fair to presume they'd be behind us in the payout queue because we have a registered charge against the property? I do hope so. Perhaps savingstream would care to clarify the situation. Normal cool or not, I wouldn't lend say £100k to a property developer unsecured at 0% for an ill-defined term? Is there really no security for these people? It depends a bit what your source of funds is and what the punishment is for being found with your fingers in the till in that country, these rates/risks might be the best of a possible loss. 
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treeman
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Post by treeman on Apr 21, 2016 15:35:04 GMT
Fully allocated now - about 25%
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 21, 2016 15:40:32 GMT
Fully allocated now - about 25% 26.1% Mad scramble to up other PF I suspect
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investibod
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Post by investibod on Apr 21, 2016 15:43:31 GMT
Fully allocated now - about 25% Pretty close. I make it 26%.
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Liz
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Post by Liz on Apr 21, 2016 15:43:39 GMT
What! All this eulogising over your contributions and youve actually been slacking off. I was expecting a least a 1 page analysis ready to go. Pull you're finger out man. bigal would have done his by now Guys. I think he's an imposter, possibly the former Hull valuer in disguise  PS just dont ask me to do any maths ... or picture analysis!  Bring back BigAl  I'm going for 25% allocation. Someone owes me a choccie bar
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treeman
Member of DD Central
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Post by treeman on Apr 21, 2016 15:47:55 GMT
Fully allocated now - about 25% 26.1% Mad scramble to up other PF I suspect That was about £6.7 M pre-fund !
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