cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Jun 1, 2016 16:07:38 GMT
This Loan Has Been Repaid (Before Drawdown)
The reason for this is explained by SS HERE
| Loan Amount | : | £1,750,000
| | Security Value | : | £2,500,000
| | SS Indicated LTV | : | 70% | | 90 Day Market Valuation | : | Not Provided | | LTV Based on 90 day Market Valuation | : | N/A |
Last 3 Updates From SS (ignoring "No change" and pre-live updates) Date
| Information
| | 26/07/2016 | The borrower is struggling to raise the deposit. We will probably cancel this loan next week if there is no movement.
| | 08/07/2016 | Stuck in legals.
| | 17/06/2016 | Drawdown expected midweek. |
Observations from the valuation report & other remarks
> The borrower is looking to purchase the property and then renovate to a high standard > The subject property comprises the long leasehold interest (119 years unexpired) in a three bedroom purpose built flat, situated on the second floor of a five storey mansion block containing a total of 8 flats. The building is judged to have been constructed circa 1900s. > At the time of inspection, the flat was in the process of being renovated and unoccupied > The surrounding locality is a predominantly “high value” area, comprising buildings of varying eras and differing style and character from Georgian to the present day, targeted at higher income owner occupiers and tenants. > The surveyor did not undertake detailed enquiries of the Local Planning Authority and they simply assumed that all necessary consents and approvals have been obtained  > The borrowers company that wants the funds to purchase & develop the property is only a year old, and the sole director has only one other business (also only a year old), with no other companies ever associated with that director. I tried searching the director to see if there was any history of property development, but couldn't find any. SS have not added on their overview that this borrower is an experienced property developer
> This is a 4-month loan, with the plan being "renovate & sell the property" to recover the loan; which means that the developer has to redevelop the property (to a high standard) and sell it, all within 4-months (the term that interest is held for...). This was flagged up by mikes1531 here.> Exit StrategyOnce renovated the client will sell the property.
| Code Number Assigned | : | 01/06/2016 | | Loan went live @ | : | 03/06/2016 | | Allocation | : | 23.3% | | Amount of Investors @ Live | : | 1924 |
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mikes1531
Member of DD Central
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Post by mikes1531 on Jun 1, 2016 21:06:32 GMT
The stated exit strategy is "Sale". As a result, I've submitted the following Q to SS... I have trouble believing that this property actually could be done up and sold in less than four months. I can't help thinking that SS's policy of retaining interest up front, and seemingly not having penalty clauses requiring a higher interest rate if a loan isn't repaid on time, lead borrowers to understate the term they expect to need the loan for -- resulting in unrealistic expectations and negative terms remaining. The above exchange is from the Pipeline Loans thread, but probably ought to be here now that we have a separate thread for this loan. The reply from SS was... "The property doesn't need much doing to it. New kitchen and bathroom and general refurb"
There seems to be a conflict between the statement in the SS loan Overview "The borrower is looking to purchase the property and then renovate to a high standard" and the statement in the valuation report that "At the time of inspection, the flat was in the process of being renovated and unoccupied."
Has the borrower already taken possession of the property? If so, why do they need the SS loan? If not, are they spending money on renovation before they own it?
I'll have to ask for some more clarity from savingstream.
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Post by GSV3MIaC on Jun 1, 2016 21:11:09 GMT
Unless they have a chain-free buyer lined up, with cash or mortgage in hand, I'd tend to agree that 4 months (to hand the cash back to SS) is rather optimistic. There's lawyers, surveys, searches, bankers, and all sorts of hoops to jump through. I believe I did once sell a property in <4 months, but that was a fluke. 8>.
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Post by grodecki on Jun 1, 2016 21:24:05 GMT
Remotely keenly priced property in London will be snapped up very, very quickly. Interesting to see what they price at.
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cooling_dude
Bye Bye's for the PPI
Posts: 2,853
Likes: 4,298
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Post by cooling_dude on Jun 1, 2016 21:33:54 GMT
The stated exit strategy is "Sale". As a result, I've submitted the following Q to SS... I have trouble believing that this property actually could be done up and sold in less than four months. I can't help thinking that SS's policy of retaining interest up front, and seemingly not having penalty clauses requiring a higher interest rate if a loan isn't repaid on time, lead borrowers to understate the term they expect to need the loan for -- resulting in unrealistic expectations and negative terms remaining. The above exchange is from the Pipeline Loans thread, but probably ought to be here now that we have a separate thread for this loan. The reply from SS was... "The property doesn't need much doing to it. New kitchen and bathroom and general refurb"
There seems to be a conflict between the statement in the SS loan Overview "The borrower is looking to purchase the property and then renovate to a high standard" and the statement in the valuation report that "At the time of inspection, the flat was in the process of being renovated and unoccupied."
Has the borrower already taken possession of the property? If so, why do they need the SS loan? If not, are they spending money on renovation before they own it?
I'll have to ask for some more clarity from savingstream . Thanks Mike; I missed that line of conversation I've added this to my DD post; the problem I have with this loan (along with this new observation) is that the borrower has little history in property development (as far as I can see). However, bricks and mortar in this part of London looks like a safe investment...
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Liz
Member of DD Central
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Post by Liz on Jun 1, 2016 21:35:05 GMT
I see a 3 bed on sale on rightmove for £3.45m, In the same block, d*** s***** mansions
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jonah
Member of DD Central
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Post by jonah on Jun 1, 2016 21:37:32 GMT
Ignoring the politics, I'm not personally investing cash into London property under very late June or early July. I'm starting to look at pm and pp as potential next platforms but not until then. If this goes live in say, the next 22 days, potential uncertainty means I will probably give it a miss.
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Post by Deleted on Jun 2, 2016 10:43:37 GMT
Ignoring the politics, I'm not personally investing cash into London property under very late June or early July. I'm starting to look at pm and pp as potential next platforms but not until then. If this goes live in say, the next 22 days, potential uncertainty means I will probably give it a miss. what is pm and pp?
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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 Jun 2, 2016 10:59:29 GMT
Ignoring the politics, I'm not personally investing cash into London property under very late June or early July. I'm starting to look at pm and pp as potential next platforms but not until then. If this goes live in say, the next 22 days, potential uncertainty means I will probably give it a miss. what is pm and pp? Property Moose, Property Partner - both are property investment platforms
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Post by mrclondon on Jun 2, 2016 11:23:56 GMT
A bit of local context as until my retirement last year my office wasn't very far from here and I often wandered around Mayfair for some lunchtime exercise.
The relatively few residential properties in Mayfair are attractive to the staff at the numerous diplomatic missions scattered round Mayfair, Marylebone and Fitzrovia as well as American expats working in the hedge fund and high end antique businesses in Mayfair. £2.2m for a 3 bed sounds not unreasonable, but like most such properties probably has no provision for car parking. Grosvenor Square Gardens and Hyde Park are both a short walk away.
I've no idea why the valuation report mentions Hyde Park corner / Piccadilly line tube as that is the far south west corner of Mayfair. The property is closest to Bond Street tube less than 5 mins walk away (Jubilee and Central lines plus Crossrail from 2018/9 i.e. direct fast line to Heathrow and Canary Wharf), and black cabs by the hundred can be hailed on Oxford Street.
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Post by lb on Jun 2, 2016 12:48:45 GMT
Not quite sure how this valuer arrives at £2.5m search.knightfrank.co.uk/wer140030 30% bigger in the same block and even that cant shift at £2.5m. my guess is this property would not even fetch £2m in the current super prime climate. quick sale, maybe £1.75m |
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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 Jun 2, 2016 13:06:11 GMT
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Post by mrclondon on Jun 2, 2016 13:50:26 GMT
Not quite sure how this valuer arrives at £2.5m search.knightfrank.co.uk/wer140030 30% bigger in the same block and even that cant shift at £2.5m. my guess is this property would not even fetch £2m in the current super prime climate. quick sale, maybe £1.75m Err .. had you spotted that this example you've quoted only has a 31 year lease. Will be close to impossible to source a mortgage (residential or BTL) with such a small remaining lease. Also only 2 beds, and from the photos what looks like a very narrow kitchen which is not what the current market expects at that sort of price. Any lease extension likely to cost several hundred thousand pounds on top. Purchase price plus lease extension will probably have to be paid with cash, then refinanced later.
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bernard
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Post by bernard on Jun 2, 2016 14:21:21 GMT
Using the recent comparables gives me a value in the range of 2.1mm - 2.2mm, rather than 2.5mm. This is giving the loan a very high LTV (more like 80%), even before taking account of anecdotal comments on the softness in this market segment following a period of strong performance. Throw in a potential brexit and you could very quickly have insufficient security on this one.
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locutus
Member of DD Central
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Post by locutus on Jun 2, 2016 14:33:14 GMT
Not quite sure how this valuer arrives at £2.5m search.knightfrank.co.uk/wer140030 30% bigger in the same block and even that cant shift at £2.5m. my guess is this property would not even fetch £2m in the current super prime climate. quick sale, maybe £1.75m Err .. had you spotted that this example you've quoted only has a 31 year lease. Will be close to impossible to source a mortgage (residential or BTL) with such a small remaining lease. Also only 2 beds, and from the photos what looks like a very narrow kitchen which is not what the current market expects at that sort of price. Any lease extension likely to cost several hundred thousand pounds on top. Purchase price plus lease extension will probably have to be paid with cash, then refinanced later. Do you think the valuation is fair?
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