archie
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Post by archie on May 12, 2017 11:25:10 GMT
If it does not happen I would think they would lose a fair few investors as people have moved money from the same loan till go there. Didn't that hotel fill in the end ..it ended up being repaid for other reasons if memory serves me correctly It was repaid due to probate issues, can't recall if it ever filled. Collateral had covered all the interest up to that point. It will be relisted when probate issues cleared apparently.
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metoo
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Post by metoo on May 12, 2017 12:13:40 GMT
Given that Ed is worriting about whether "The bridging opportunity is however £3.3m." is 'too big', I doubt that a development opportunity of the size of this one would have even merited a serious look. I have to wonder whether CO can float it either, without some extraordinary effort. M********* H*ll is a £7m development facility, bigger than the full development facility to be drawn on B***** student accommodation at CO (around £5.3m I believe). Ed's question was whether £3.3m was too big to fund as a single tranche bridging loan.
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star dust
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Post by star dust on May 12, 2017 13:06:16 GMT
They said the exact same thing about a certain hotel, but it never happened. Didn't that hotel fill in the end ..it ended up being repaid for other reasons if memory serves me correctly It took six weeks, but it did fill in the end, it was even being traded on the secondary market (not me I was quite happy with my stake) at the time it was pulled. It was withdrawn as archie mentioned, for issues with probate, but if it does come back on the same terms I'd be quite happy to re-invest.
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Post by GSV3MIaC on May 12, 2017 13:16:03 GMT
Given that Ed is worriting about whether "The bridging opportunity is however £3.3m." is 'too big', I doubt that a development opportunity of the size of this one would have even merited a serious look. I have to wonder whether CO can float it either, without some extraordinary effort. M********* H*ll is a £7m development facility, bigger than the full development facility to be drawn on B***** student accommodation at CO (around £5.3m I believe). Ed's question was whether £3.3m was too big to fund as a single tranche bridging loan. Good point .. I'd forgotten MH had managed to float OK (so far). It has been so drawn out I sort of lost sight of the total ..
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oik
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Post by oik on May 13, 2017 17:10:31 GMT
MT show the asset value for this loan as being £1,600,000.00. On "the other" site their valuation report also gives the market value of the site as £1,600,000 or (£1,400,000 subject to 90 day marketing constraint).
But they then describe the offer as having a security value of £2,440,000.00 including projected freehold ground rents, which they say is an LTV of 69% and the loan is to be for £1,600,000. The rate offered is the same 12% as with MT but with up to 4% cashback for anyone putting in £100k plus. (Which might be seen as an opportunity to grab the 4% then try to dump it on the SM, perhaps causing problems when selling for those who got less or no cashback.)
My understanding was that not a vast amount of progress has been made apart from back-filling the cellars that were not known about at the time of the first valuation so causing unforseen costs. Their VR describes the "site as marginal if works were not already implemented". I haven't had a chance to look hard andcompare reports but saw no mention of finding a cache of gold bars in one of those cellars. Would someone wiser than me care to comment on how we get from £1.6m to £2.44m when not a lot seems to have changed?
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oik
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Post by oik on May 13, 2017 18:30:07 GMT
This post and replies may throw some light on it for you (although I'd recommend reading the whole thread). I saw that but, as I'd assumed valuations should be done in the same way, was interested in how their valuation was so much higher than that of MT - which may have been still lower had the problem of the cellars been known at the time. My instinct at the moment is it may have been the reason why MT let the deal walk away and I'll probably do the same especially as Collateral see the need to pay 12% plus 4% cashback to get the bigger loans in.
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metoo
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Post by metoo on May 13, 2017 19:09:30 GMT
Would someone wiser than me care to comment on how we get from £1.6m to £2.44m when not a lot seems to have changed? I certainly won't claim to be wiser, but I did compare the 2 detailed valuations (pdf-page 26 of the valuation for MT, pdf-page 19 of the valuation for Col). Please don't rely on my figures as I could get it wrong. Remember this will be a multi-tranche development loan, total of up to £5,875,350. The current valuation is the sum of: the current residual site value ( calculated backwards from the final GDV estimate on various assumptions) plus the projected market value of the ground rents on the student rooms. In the valuation prepared for MT dated Feb 2016, the values were: current site £775k + ground rents £875k = £1.65m. The valuation prepared for Col April 2017 has: current site £1600k + ground rents £840k = £2.44m. The main difference is in the GDV excluding ground rents, which was £6.385m and is now £7.69m, up by 20%. The final GDV also adds on the market value for freehold ground rents. So final GDV went from £7.26m to £8.515m, up by 17.3%. Construction costs were originally to be £4m, now £5,862,071, up by 47%. Various assumptions go into the GDVs, which are based on a value for the net rooms income. The current GDV seems to be consistent with the average price we are told for the 90 units sold with contracts exchanged. The figures differ slightly between the report and Col website. Latest site photos on Col show steelwork being erected above ground.
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stevio
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Post by stevio on May 13, 2017 20:50:29 GMT
MT show the asset value for this loan as being £1,600,000.00. On "the other" site their valuation report also gives the market value of the site as £1,600,000 or (£1,400,000 subject to 90 day marketing constraint). But they then describe the offer as having a security value of £2,440,000.00 including projected freehold ground rents, which they say is an LTV of 69% and the loan is to be for £1,600,000. The rate offered is the same 12% as with MT but with up to 4% cashback for anyone putting in £100k plus. (Which might be seen as an opportunity to grab the 4% then try to dump it on the SM, perhaps causing problems when selling for those who got less or no cashback.) My understanding was that not a vast amount of progress has been made apart from back-filling the cellars that were not known about at the time of the first valuation so causing unforseen costs. Their VR describes the "site as marginal if works were not already implemented". I haven't had a chance to look hard andcompare reports but saw no mention of finding a cache of gold bars in one of those cellars. Would someone wiser than me care to comment on how we get from £1.6m to £2.44m when not a lot seems to have changed? Freehold ground rents added to land value - all units now pre sold, this adds value
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am
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Post by am on May 13, 2017 21:14:35 GMT
M********* H*ll is a £7m development facility, bigger than the full development facility to be drawn on B***** student accommodation at CO (around £5.3m I believe). Ed's question was whether £3.3m was too big to fund as a single tranche bridging loan. Good point .. I'd forgotten MH had managed to float OK (so far). It has been so drawn out I sort of lost sight of the total .. However MH is underwritten by BPF, so it's not directly comparable. The size of the loan is a plausible reason for MT not offering it. (Collateral are said to have underwriters in place, which allows them to be more aggressive in this case.)
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am
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Post by am on May 13, 2017 21:55:28 GMT
MT show the asset value for this loan as being £1,600,000.00. On "the other" site their valuation report also gives the market value of the site as £1,600,000 or (£1,400,000 subject to 90 day marketing constraint). But they then describe the offer as having a security value of £2,440,000.00 including projected freehold ground rents, which they say is an LTV of 69% and the loan is to be for £1,600,000. The rate offered is the same 12% as with MT but with up to 4% cashback for anyone putting in £100k plus. (Which might be seen as an opportunity to grab the 4% then try to dump it on the SM, perhaps causing problems when selling for those who got less or no cashback.) My understanding was that not a vast amount of progress has been made apart from back-filling the cellars that were not known about at the time of the first valuation so causing unforseen costs. Their VR describes the "site as marginal if works were not already implemented". I haven't had a chance to look hard andcompare reports but saw no mention of finding a cache of gold bars in one of those cellars. Would someone wiser than me care to comment on how we get from £1.6m to £2.44m when not a lot seems to have changed? Freehold ground rents added to land value - all units now pre sold, this adds value I'm missing something. (I haven't looked at/compared the two VRs yet.) Comments upthread indicate that the capitalised valuation of the ground rents was included in the MT VR. Comments upthread make it look to me as if the Collateral VR is double counting the ground rents - surely that can't be the case? The GDV of the project includes the capitalised value of the ground rents, regardless of whether this is explicitly included in the GDV, or added on to the residual value at the end. To a first approximation preselling the units doesn't affect the value of the ground rents, and doesn't effect the residual value. (The second approximation is that the units being presold might be seen as derisking the project, with the result that a potential purchasor might accept a lower profit margin thus raising the residual value.) A glance at the Collateral VR, leads me to the hypothesis that the difference is the £7**,*** contract expenditure to date - that is the site is worth more because some work has been done on it. Whether this is true for our purposes requires more thought - as I understand there was unplanned expenditure relating to backfilling of cellars found on the site. Since this additional cost comes out of the contractor's profit margin (since it's a fixed price contract) it doesn't change the risk of the project not producing sufficient value to repay the loan, and thus doesn't affect the residual value calculation. But if the development doesn't complete for any reason, the additional cost goes into the residual value calculation made by a potential purchaser. But since the GDV and contract values have also changed between the two VRs it would appear that it's not that simple. It's necessary to look at the two RV calculations side by side and identify the nature of the differences.
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metoo
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Post by metoo on May 13, 2017 22:06:10 GMT
Freehold ground rents added to land value - all units now pre sold, this adds value Col loan details says: "Currently 90 of the 140 units have already been sold with contracts exchanged and reservation fees paid." Have you seen anything different?
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metoo
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Post by metoo on May 13, 2017 22:23:41 GMT
I'm missing something. (I haven't looked at/compared the two VRs yet.) Comments upthread indicate that the capitalised valuation of the ground rents was included in the MT VR. Comments upthread make it look to me as if the Collateral VR is double counting the ground rents - surely that can't be the case? The GDV of the project includes the capitalised value of the ground rents, regardless of whether this is explicitly included in the GDV, or added on to the residual value at the end. To a first approximation preselling the units doesn't affect the value of the ground rents, and doesn't effect the residual value. (The second approximation is that the units being presold might be seen as derisking the project, with the result that a potential purchasor might accept a lower profit margin thus raising the residual value.) A glance at the Collateral VR, leads me to the hypothesis that the difference is the £7**,*** contract expenditure to date - that is the site is worth more because some work has been done on it. Whether this is true for our purposes requires more thought - as I understand there was unplanned expenditure relating to backfilling of cellars found on the site. Since this additional cost comes out of the contractor's profit margin (since it's a fixed price contract) it doesn't change the risk of the project not producing sufficient value to repay the loan, and thus doesn't affect the residual value calculation. But if the development doesn't complete for any reason, the additional cost goes into the residual value calculation made by a potential purchaser. But since the GDV and contract values have also changed between the two VRs it would appear that it's not that simple. It's necessary to look at the two RV calculations side by side and identify the nature of the differences. I did compare the 2 valuations because I wanted to understand this one. The valuation method is very similar in both but some assumed factors differ, eg the % outgoings that reduce the gross rental income to obtain the net rental income. I presume there are good reasons for these assumptions and they don't get tweaked so that the valuation comes right for the required LTV! The number of rooms of each type and market rents for each have changed. Freehold ground rent value is separately accounted for in both valuations. Residual site value comes from the GDV based on forecast net room-rental income and a retail unit. There is no double-counting of ground rents. It's a coincidence that the total original valuation is approximately the same as the GDV ex ground rents in the new valuation. The MT loan description stated the valuation as £1.6m but their valuation report said £1.65m It's also a coincidence that construction spend to date roughly matches the valuation increase. Both valuations also assume the interest rate on finance will be 8%.
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stevio
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Post by stevio on May 14, 2017 3:03:54 GMT
I'm missing something. (I haven't looked at/compared the two VRs yet.) Comments upthread indicate that the capitalised valuation of the ground rents was included in the MT VR. Comments upthread make it look to me as if the Collateral VR is double counting the ground rents - surely that can't be the case? The GDV of the project includes the capitalised value of the ground rents, regardless of whether this is explicitly included in the GDV, or added on to the residual value at the end. To a first approximation preselling the units doesn't affect the value of the ground rents, and doesn't effect the residual value. (The second approximation is that the units being presold might be seen as derisking the project, with the result that a potential purchasor might accept a lower profit margin thus raising the residual value.) A glance at the Collateral VR, leads me to the hypothesis that the difference is the £7**,*** contract expenditure to date - that is the site is worth more because some work has been done on it. Whether this is true for our purposes requires more thought - as I understand there was unplanned expenditure relating to backfilling of cellars found on the site. Since this additional cost comes out of the contractor's profit margin (since it's a fixed price contract) it doesn't change the risk of the project not producing sufficient value to repay the loan, and thus doesn't affect the residual value calculation. But if the development doesn't complete for any reason, the additional cost goes into the residual value calculation made by a potential purchaser. But since the GDV and contract values have also changed between the two VRs it would appear that it's not that simple. It's necessary to look at the two RV calculations side by side and identify the nature of the differences. I did compare the 2 valuations because I wanted to understand this one. The valuation method is very similar in both but some assumed factors differ, eg the % outgoings that reduce the gross rental income to obtain the net rental income. I presume there are good reasons for these assumptions and they don't get tweaked so that the valuation comes right for the required LTV! The number of rooms of each type and market rents for each have changed. Freehold ground rent value is separately accounted for in both valuations. Residual site value comes from the GDV based on forecast net room-rental income and a retail unit. There is no double-counting of ground rents. It's a coincidence that the total original valuation is approximately the same as the GDV ex ground rents in the new valuation. The MT loan description stated the valuation as £1.6m but their valuation report said £1.65m It's also a coincidence that construction spend to date roughly matches the valuation increase. Both valuations also assume the interest rate on finance will be 8%. Are you able to make a table to compare the values side by side and add it here?
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stevio
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Post by stevio on May 14, 2017 3:06:19 GMT
Freehold ground rents added to land value - all units now pre sold, this adds value Col loan details says: "Currently 90 of the 140 units have already been sold with contracts exchanged and reservation fees paid." Have you seen anything different? Yes, the agent selling them was contacted and they confirmed all units were now sold, CO were informed and they were going to confirm themselves and update. This maybe after the weekend now
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littleoldlady
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Post by littleoldlady on May 14, 2017 7:36:33 GMT
I have adopted a simplistic attitude to this loan. If Ed wants out, I want out.
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