I love this project, I really do, but the update for the new tranche is pitiful. Not enough to make me want to up my investment.
And, I note this
"Borrower is progressing with 5 options regarding refinance, with a view to completing the refinance as soon as possible after Practival Completion of the site.
This is in addition to the ongoing discussions with the Private Rented Sector (PRS) Guarantee Scheme, as the Borrower did not want to be reliant on only one exit route." (Lendy spelling, not mine)
But as far as I was aware, that PRS avenue is fast closing. I asked Lendy several times for an update on this, but never got a response.
The Government PRS scheme if this is what is being discussed (and I believe it is) offers a way to access funds at _very_ low rates. I'd be surprised if private financing could beat it. It's good they are investigating alternatives, but if they already had assurance from the PRS scheme, I doubt this would be needed.
As I pointed out some time ago, according to the PRS docs on the UK gov website I read 'Applications for the private rented sector debt guarantee must receive approval in
principle from Government by 31 December 2017'"
But there are rules regarding qualification in these documents. Notably.
"Guaranteed debt only available from practical completion/purchase of completed
units, but a letter of comfort that the project has qualified for guarantee support may
be issued to support borrowers’ ability to access development finance."
Despite me asking Lendy, I never got a response as to whether that letter of comfort had been received or was being sought. If it had been, I would expect Lendy to be disclosing this as it is ENORMOUS for this loan and would encourage tranches to fill. Lendy say in their update "we have now agreed an extension to the facility for up to 4 months to allow for the expected Practical Completion of the site by October 2017". That's cutting it pretty fine unless they already have the letter.
and another PRS rule
"Finance will generally be available once projects have stabilised. Stabilisation will
be achieved when the project has met the business plan base case projections
presented by the borrower and agreed by PRS Operations Ltd and the guarantor
in terms of, but not limited to, occupancy, rental levels, gross income and net
operating income."
The above means (as I read it) that even if they qualify and get a letter backing future finance, it is after this period of 'stabilisation', monitoring rents, occupation levels, etc. that they would actually get funds. This could be 6 months or more. However, if they just had that letter, it would be a golden ticket to refinance I believe. They'd still need a significant extension from Lendy or very likely at much lower rates elsewhere given the letter/security but I'd certainly still fund it.
I'm also a little confused as to why they'd not already have gone this route. The letter of comfort is intended to allow developers access to development finance and probably at much lower rates than available via Lendy.
Lendy
Paul64 - If this letter has been obtained, please, please let us know (It'd fill your tranche!). I'd certainly fund it further if this was available. If it has not, then I'd really like to know why given the stage the project appears to be at. Not much I could do about it given the SM, but still. I like to be in the know. Perhaps for the weekly update? It'd be great news to share...
The project as far as I can see is well off the ground and open for business. I like what I see (from other sources - Lendy don't give me much in the way of news) and PRS schemes in general I think are in great favour in the UK, so I'm still holding reasonably happily.
I was encouraged by one or 2 of the last updates on other loans - Not excellent, but a good step forward. This one, not so much