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Post by martin44 on Sept 10, 2016 10:00:54 GMT
Copied from the Savills article that dualinvestor attached: "Our research shows that, during the first half of 2016, the average value of farmland across Great Britain fell by just under -2% .... Agriculture tends to do well in time of economic uncertainty. In addition, the weak pound creates opportunities for overseas buyers. Both of these factors, along with the anticipated reduced supply, may help support farmland values." So why would anyone accept anything close to a 45% discount (implied by "£5k per acre") versus a market valuation in Jan 2016 of £9k per acre? And why would a "fire sale" ever be needed when the land could simply be marketed for sale as standard and farmed under contract in the meantime. I quite understand that different people arrive at different opinions of individual loans but some of the nonsense being spouted about this one is ludicrous. Do I think SS were unwise to add news (presumably passed to them by the borrower or their intermediary) that the land had already been "re-zoned" without checking what had actually changed? - Yes. Do I think there is any problem with the underlying security of this loan? - No. Is it unusual for a commercial fire sale to realize only 50% of its value?
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SteveT
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Post by SteveT on Sept 10, 2016 10:09:24 GMT
Land is, by definition, immovable so you are relying on a willing buyer within a very small radius that is why, if one was not available, you would accept a discount. Sorry but you're simply wrong there. Because farmland can be sheltered from Capital Gains Tax and Inheritance Tax, huge swathes of UK agricultural land these days is held for investment by HNWIs and family estates, then farmed under contract or let to tenant farmers (see www.theguardian.com/society/2015/sep/02/britain-farmland-tax-haven-reform ). 900 acres of good quality farmland in Bedfordshire would be marketed nationwide, regardless of any "hope" value.
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SteveT
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Post by SteveT on Sept 10, 2016 10:16:29 GMT
Is it unusual for a commercial fire sale to realize only 50% of its value? That entirely depends on the asset. For a substantial parcel of good agricultural land in SE England, I reckon it's unheard of.
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Post by dualinvestor on Sept 10, 2016 10:18:36 GMT
Land is, by definition, immovable so you are relying on a willing buyer within a very small radius that is why, if one was not available, you would accept a discount. Sorry but you're simply wrong there. Because farmland can be sheltered from Capital Gains Tax and Inheritance Tax, huge swathes of UK agricultural land these days is held for investment by HNWIs and family estates, then farmed under contract or let to tenant farmers (see www.theguardian.com/society/2015/sep/02/britain-farmland-tax-haven-reform). 900 acres of good quality farmland in Bedfordshire would be marketed nationwide, regardless of any "hope" value. Why does that make me wrong? I said the yield is little more than 1% so if an investor can't be found notwithstanding the other possible but not guaranteed advantages (agricultural land did not rise in value for decades that is why those tax advantages exist). 900 acres represents nearly 1% of the sales of land in England for an entire year and we have passed the peak selling season. This is a fruitless discussion you are of the opinion the land valus is sound, I can find reasons to dispute that, martin44 and I believe it could be suspect and you can find reasons to dispute that, we shall not agree and it will only be tested if the loan defaults and it is probably the desire of everyone here that it doesn't; however given the title of the thread it wouldn't be being discussed unless at least one person thought that was a possibility.
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SteveT
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Post by SteveT on Sept 10, 2016 10:28:01 GMT
To reiterate what I said above, sharing different opinions is what a forum like this is all about. However opinions should not be presented as facts without evidence to back them up.
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Post by dualinvestor on Sept 10, 2016 10:32:11 GMT
To reiterate what I said above, sharing different opinions is what a forum like this is all about. However opinions should not be presented as facts without evidence to back them up. I presented "facts" although martin44 clarified his as opinion, in much the same way as you presented "facts." We have irreconcilable differences on what those facts represent and it is not worth continuing any discussion with each of us having implaccable positions.
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adrianc
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Post by adrianc on Sept 10, 2016 11:13:42 GMT
To reiterate what I said above, sharing different opinions is what a forum like this is all about. However opinions should not be presented as facts without evidence to back them up. I presented "facts" although martin44 clarified his as opinion, in much the same way as you presented "facts." We have irreconcilable differences on what those facts represent and it is not worth continuing any discussion with each of us having implaccable positions. I think our definition of "facts" might differ. I am not going to try and justify the values but according to Savills... That looks and smells a lot like not just opinions, but somebody else's opinions.
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Post by dualinvestor on Sept 10, 2016 11:22:04 GMT
I presented "facts" although martin44 clarified his as opinion, in much the same way as you presented "facts." We have irreconcilable differences on what those facts represent and it is not worth continuing any discussion with each of us having implaccable positions. I think our definition of "facts" might differ. I am not going to try and justify the values but according to Savills... That looks and smells a lot like not just opinions, but somebody else's opinions. I'm sure our definition of facts do differ, they also may be only opinions from Savills but a) they are one of the premier agricultural valuers in the UK and b) like most premier experts their opinions are often taken as facts. You will note the inverted commas over both what I and SteveT presented. As far as I am concerned both of us presented informed opinions, based upon an original opinion postulated by martin44. Few people on here, including you, are in a postion to express facts but we can rely on papers prepared by experts in the field (no pun intended)
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Post by chrisj on Sept 10, 2016 11:59:45 GMT
Time to break out the popcorn
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Liz
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Post by Liz on Sept 10, 2016 12:08:15 GMT
Time to break out the popcorn I don't know if that was a "pun" or not 
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Post by wildlife2 on Sept 10, 2016 12:09:22 GMT
Fields are useful for growing popcorn......
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ablender
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Post by ablender on Sept 10, 2016 12:20:21 GMT
I jumped into this page. I will have to go back and read the lot. It seems interesting.
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ablender
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Post by ablender on Sept 10, 2016 12:24:25 GMT
Blimey, some peoples weakest are my most invested  But also why the sudden drought. /mod hat off Because, as someone said upstream, ~£10m got paid back, and there was nothing else to spend it on. The MT cupboard is also bare, and IIRC ABL has had no new loans for a while, so there is a lot of money chasing few borrowers. Personally I'd rather have it sat as cash than stick it into some of the dregs, but other people seem to lack patience, or caution, or whatever it is that stops me investing in the first thing with actual availability, regardless of how feeble it looks (my ideas of feeble are rather like mrclondon 's ideas, plus a few where the valuation seems to be rather adrift from the last known selling price, with no visible means of support, and a couple of others where the history of the borrower raises eyebrows, if not actual hackles.) At moments like these, I kind of am glad that I do not have much money that I have to invest in any loan available. Unfortunately for me, these moments are short lived. Most of the time I wish I had more money.
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nick
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Post by nick on Sept 10, 2016 15:41:56 GMT
Maybe I've missed it, but what has occurred to bring into question the original valuation? There has been a slight softening in agri land prices during in H1 2016, but nothing to be overly concerned with. I'm not an expert in agri land, but I would have expected it to be a more commoditised market than residential or commercial property given its more standardised nature and less prone to significant variations in price from one example to another - maybe this is too simplistic. Regardless, I still can't see what has prompted the second guessing of the Feb 16 surveyor value?
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Sept 10, 2016 16:23:27 GMT
Maybe I've missed it, but what has occurred to bring into question the original valuation? There has been a slight softening in agri land prices during in H1 2016, but nothing to be overly concerned with. I'm not an expert in agri land, but I would have expected it to be a more commoditised market than residential or commercial property given its more standardised nature and less prone to significant variations in price from one example to another - maybe this is too simplistic. Regardless, I still can't see what has prompted the second guessing of the Feb 16 surveyor value? You're correct. Investors have been so hung up about the (non-extent) zoning of the land, that they forget that when the loan went live the land was valued with no hope value included. Early on in the discussions, it was accepted that not much was going to happen on this land for years (maybe even decades). There has been a slight downturn in the value of agriculture land, but not enough to worry.
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