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Post by westcountry on Nov 21, 2016 18:15:02 GMT
Thanks SteveT, you're right, it is there from p31 onwards in the valuation already uploaded.
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MONEY
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Post by MONEY on Nov 21, 2016 20:09:31 GMT
MONEY: In short:- Saving Stream have already attempted to float this proposal on their platform in Jul 2016. Due to investor's due diligence, it sank. The borrower has unsuccessfully been attempting to sell since 2011 for £2.1m. The previously advertised sale included more land and one further property than is being offered here as security at the alleged value of £4.150m. Answer: The sale documents in 2012 were incorrect as it never had planning permission. It was just deemed suitable for planning permission. There is slightly less land than in the original sales particulars but the land in question wasn't usable for the proposed development. The valuation gives the value for the land that does form part of the security.Not quite - planning permission for change of use from agricultural to holiday lets was granted in Apr 2010 which at least got them part of the way there, so the attached particulars for 2012, those in 2011 and those listed more recently were not incorrect at the time of going to print. But yes, more specific, detailed, conditional planning for the 444 lodges wasn't agreed until 2014, which is when B*******h L******e Limited took the option to buy the farm for £2.1m, subject to the latter planning permission being agreed, as per their application. To quote The Daily Record (and numerous others):- " The company behind the scheme, B*******h L******e Limited, will pay £2.1 million for the farm site if they get planning permission..." (my bold) To answer APF's second point - personally, I would not deem 119 acres to be ' slightly less land' than 147 acres. However, I would deem c.24% less land to be considerably less; especially when the excluded curtilages were bought within the same £2.1m purchase price, and yet are not being offered to investors as security, whether now part of the proposed development or not. MONEY: I've rotated the overhead plan included in Ablrate's VR for comparison. The £2.1m sales particulars from 2012 was for 147 acres of land. The Ablrate proposal lists 119 acres of land, so as you can see, the Valuation Report's plan is incorrect - it not only displays a further, smaller, segregated plot of land in the top-right area, but the full 147 acres advertised for sale in 2011-2016, excluding a couple of small corners being removed. At least one of the properties that isn't included in the proposal's security sits on it's own plot in the bottom-left corner, so that area should have been removed also - at a guesstimate, that plot alone is c.30 acres. Answer: The valuation is for the security that is on offer. Whilst the valuation report could have been clearer, it does state in Clause 2.3 that the smaller parcel of land isn't included in the valuation.With respect - the displayed smaller parcel of land is not on offer, and neither is a large percentage of the main outlined drawing, which more-or-less displays the full 147 acres of land purchased by B*******h L******e Limited, not the 119 acres being offered as security - hence, the plan included in the VR is both incorrect and misleading, period. ablrate - whilst it's understood that the responses you've provided originate from APF rather than yourselves, and your own time is much appreciated, there is no requirement to expand on these points any further than they already have been; at least on my behalf, but thank you.
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registerme
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Post by registerme on Nov 22, 2016 8:37:50 GMT
Maybe I am missing something (still need coffee), but if this didn't get away on SS because of concerns about the valuation of the underlying security I am struggling to see what is different (bar 14% vs 12%, additional credit insurance, and less land as security) this time around.
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Post by ablrate on Nov 22, 2016 8:54:33 GMT
ablrate , thank you for a very comprehensive response! I've just got a few further queries: 1) Please could you upload the 2014 planning permission document to the Loan documents on the ABLRate website? Rightmove marketing the property in 2012 for £2.1m with PP is a bit puzzling, although they do say "with the benefit of Planning Permission for Change of Use to 444 Holiday Lodges and Leisure Complex" which may not be the same as PP to actually build the lodges & leisure complex. Being able to see the 2014 PP document would be a great help with understanding this! 2) If the loan collapsed and the property only sold for say £1m, would ABLRate be able to sue the valuer (as you mention) to recover the difference between the sale price and his valuation, please? 3) ACF injecting £220k into the loan at pari passu - does that mean it has an equal claim on the loan to ABLRate investors, please? Not on a first-loss basis as in some MT loans? Hi Westcountry Q2. Yes, if the property was sold for £1m when it had been valued at £4m then A****s would be in a position to sue them Q3. the £220k access is putting in isn't 1st loss, but as we are stood in the middle of the loan then we are there on a total loss basis, not just 1st loss. The 220k going in just shows that we are putting our faith in it on day 1, not just being there to mop up any problems in month 24 Regards Ablrate
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SteveT
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Post by SteveT on Nov 22, 2016 9:01:54 GMT
Maybe I am missing something (still need coffee), but if this didn't get away on SS because of concerns about the valuation of the underlying security I am struggling to see what is different (bar 14% vs 12%, additional credit insurance, and less land as security) this time around. Reading back through the SS thread, there's nothing to confirm for certain that it was valuation concerns that led to them withdrawing it from the pipeline, although that was the obvious assumption at the time after all the questions raised. That said, ISTM it would have been fairly straightforward for SS to explain the same facts around the 2014 planning gain, had they wished to. However, the update they posted in mid-July reads strangely in the context of the explanation provided above: " PBL - Leisure, Scotland
The Leisure park has a valuation re-confirmed by the Valuer as £4.15m. The £2.1m sale price that people have seen is a price that has been agreed for a quick sale and therefore our borrower will be purchasing the site with a large discount. We will be obtaining indemnity insurance to cover a claim for a transfer at an undervalue, following the advice from our lawyers. It is also worth noting that the bridging finance industry is a consequence of cases just like these. Purchasing discounted assets on quick sale requires short term fast methods of funding to ensure an opportunity is not missed. We have done extensive due diligence, carried out due necessary checks and insurance policies have been put in place. Therefore. we are happy to stand by the valuation and our terms." Can anyone remember whether SS's potential borrower was the same entity as here? It almost sounds like it might have been a prospective purchaser who then didn't proceed.
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stevio
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Post by stevio on Nov 22, 2016 12:49:56 GMT
ablrate changed from invest (somebodies £509) to pledge again now!
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james
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Post by james on Nov 22, 2016 14:32:20 GMT
Maybe I am missing something (still need coffee), but if this didn't get away on SS because of concerns about the valuation of the underlying security I am struggling to see what is different (bar 14% vs 12%, additional credit insurance, and less land as security) this time around. ACF taking any capital loss is a very big difference, along with that higher interest rate.
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Post by ablrate on Nov 22, 2016 14:53:27 GMT
Hi guys
Sorry for the mess up on making it live. We are just sending out an update which will explain the current status. Feedback was great, pledge system working well, with new code coming in the next few days so the next one we do like this won't be as complicated!
Thanks for all the feedback so far... we really do appreciate it.
Regards Ablrate
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grahamg
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Post by grahamg on Nov 22, 2016 16:55:20 GMT
Hi guys Sorry for the mess up on making it live. We are just sending out an update which will explain the current status. Feedback was great, pledge system working well, with new code coming in the next few days so the next one we do like this won't be as complicated! Thanks for all the feedback so far... we really do appreciate it. Regards Ablrate Read the email. sadly for i don't invest in second charges. I see this as even more of a risk than first time around
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hazellend
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Post by hazellend on Nov 22, 2016 18:03:52 GMT
I prefer the new first charge loan that is now with another lender
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nick
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Post by nick on Nov 24, 2016 20:59:08 GMT
ablrate - I have a few further questions I hope you can answer in order to fully understand the credit risk associated with this loan: 1. Whilst the fact that APF are intermediaries has been discussed as being positive from a credit perspective, it does complicate assessing the total exposure to lenders as we are exposed to both APF and the underlying borrower's credit risk. The loan documentation mainly focuses on the underlying borrower's credit and associated security documents which are sufficient to give a view on the underlying loan. The area I have less comfort, is the credit of APF, and the security in place (if any) should APF default (for whatever reason that may be unrelated to the underlying loan). Specifically, what security do we have from APF in respect of thier performance. I understand that the 2nd charge on the underlying borrower's asset will be assigned to lenders, but I'm not sure whether this helps in the event of APF defaulting (and the underlying borrower continues to perform). I note that as APF are administering the loan, a valid fixed charge cannot be placed on the underlying debt. My fear is that in the event of APF defaulting (for reasons other than the underlying loan defaulting), the underlying borrower would continue to make repayments to APF in administration/liquidation and we would be a unsecured creditor. How would lenders secure the repayments from the underlying borrower in the event of APF's default/administration/liquidation? Is there any direct contractual relationship with the underlying borrower that could procure them to make payments direct to us in the event of APF entering into adminstation/liquidation? Absence this, the only other potential security would be a floating charge on the underlying debt but I'm sure that would be complicated/diluted by existing security arrangements APF has with other lenders financing its loan book. What comfort, if any, can you provide that risk is mitigated? 2. Will a SM be made immediately in this loan on draw down? I'm still in the process of building up a diversified loan book on the platform and I'm willing to make larger initial investments if a SM in the loan is made to allow me to later diversify and reduce my concentration in the loan. I had invested in the container SPV loan on this basis but have been left holding my full investment as no SM has been made in that loan to date. Not really a specific risk regarding this loan, but nevertheless affects the amount I'm willing to invest. Thanks Nick
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stevio
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Post by stevio on Nov 24, 2016 21:12:25 GMT
ablrate - I have a few further questions I hope you can answer in order to fully understand the credit risk associated with this loan: 1. Whilst the fact that APF are intermediaries has been discussed as being positive from a credit perspective, it does complicate assessing the total exposure to lenders as we are exposed to both APF and the underlying borrower's credit risk. The loan documentation mainly focuses on the underlying borrower's credit and associated security documents which are sufficient to give a view on the underlying loan. The area I have less comfort, is the credit of APF, and the security in place (if any) should APF default (for whatever reason that may be unrelated to the underlying loan). Specifically, what security do we have from APF in respect of thier performance. I understand that the 2nd charge on the underlying borrower's asset will be assigned to lenders, but I'm not sure whether this helps in the event of APF defaulting (and the underlying borrower continues to perform). I note that as APF are administering the loan, a valid fixed charge cannot be placed on the underlying debt. My fear is that in the event of APF defaulting (for reasons other than the underlying loan defaulting), the underlying borrower would continue to make repayments to APF in administration/liquidation and we would be a unsecured creditor. How would lenders secure the repayments from the underlying borrower in the event of APF's default/administration/liquidation? Is there any direct contractual relationship with the underlying borrower that could procure them to make payments direct to us in the event of APF entering into adminstation/liquidation? Absence this, the only other potential security would be a floating charge on the underlying debt but I'm sure that would be complicated/diluted by existing security arrangements APF has with other lenders financing its loan book. What comfort, if any, can you provide that risk is mitigated? 2. Will a SM be made immediately in this loan on draw down? I'm still in the process of building up a diversified loan book on the platform and I'm willing to make larger initial investments if a SM in the loan is made to allow me to later diversify and reduce my concentration in the loan. I had invested in the container SPV loan on this basis but have been left holding my full investment as no SM has been made in that loan to date. Not really a specific risk regarding this loan, but nevertheless affects the amount I'm willing to invest. Thanks Nick The loan details the how the charge and security are structured
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hazellend
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Post by hazellend on Nov 24, 2016 21:31:21 GMT
I took a decent bite of this, rude not to at 16%.
I have done a hottub holiday this year in Dumfries and I have to say it is a wonderful part of the country.
If they just buy the land and plonk a few modern lodges on it (with hot tubs!), they will probably do okay!
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nick
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Post by nick on Nov 25, 2016 1:02:53 GMT
ablrate - I have a few further questions I hope you can answer in order to fully understand the credit risk associated with this loan: 1. Whilst the fact that APF are intermediaries has been discussed as being positive from a credit perspective, it does complicate assessing the total exposure to lenders as we are exposed to both APF and the underlying borrower's credit risk. The loan documentation mainly focuses on the underlying borrower's credit and associated security documents which are sufficient to give a view on the underlying loan. The area I have less comfort, is the credit of APF, and the security in place (if any) should APF default (for whatever reason that may be unrelated to the underlying loan). Specifically, what security do we have from APF in respect of thier performance. I understand that the 2nd charge on the underlying borrower's asset will be assigned to lenders, but I'm not sure whether this helps in the event of APF defaulting (and the underlying borrower continues to perform). I note that as APF are administering the loan, a valid fixed charge cannot be placed on the underlying debt. My fear is that in the event of APF defaulting (for reasons other than the underlying loan defaulting), the underlying borrower would continue to make repayments to APF in administration/liquidation and we would be a unsecured creditor. How would lenders secure the repayments from the underlying borrower in the event of APF's default/administration/liquidation? Is there any direct contractual relationship with the underlying borrower that could procure them to make payments direct to us in the event of APF entering into adminstation/liquidation? Absence this, the only other potential security would be a floating charge on the underlying debt but I'm sure that would be complicated/diluted by existing security arrangements APF has with other lenders financing its loan book. What comfort, if any, can you provide that risk is mitigated? 2. Will a SM be made immediately in this loan on draw down? I'm still in the process of building up a diversified loan book on the platform and I'm willing to make larger initial investments if a SM in the loan is made to allow me to later diversify and reduce my concentration in the loan. I had invested in the container SPV loan on this basis but have been left holding my full investment as no SM has been made in that loan to date. Not really a specific risk regarding this loan, but nevertheless affects the amount I'm willing to invest. Thanks Nick The loan details the how the charge and security are structured In respect of APF's credit, the only security listed in the draft loan contract is assignment of the second charge and a cross guarantee from another group company. Assignment of the second charge only has value if the underlying borrower defaults. If the underlying borrower continues to perform but APF defaults (eg one their other loan defaults, blows-up, fraud, etc etc) nothing I have read in any of the loan documentation suggests that we would have any preferential creditor claim on APF or any direct recourse to the loan repayments that the underlying borrower will continue to pay APF. Any contractual claim for the assignment of the loan repayment wouldn't rank any higher than other creditor claim. Maybe I'm missing something (which is why I raised the query), but the structuring of this loan via APF would appear to expose lenders fully to APF's credit without mitigation. Not a show stopper, but does mean that you have to get comfortable with APF's credit which is difficult given the companies were only recently incorporated and have no publicly filed financials.
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stevio
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Post by stevio on Nov 25, 2016 6:31:54 GMT
The loan details the how the charge and security are structured In respect of APF's credit, the only security listed in the draft loan contract is assignment of the second charge and a cross guarantee from another group company. Assignment of the second charge only has value if the underlying borrower defaults. If the underlying borrower continues to perform but APF defaults (eg one their other loan defaults, blows-up, fraud, etc etc) nothing I have read in any of the loan documentation suggests that we would have any preferential creditor claim on APF or any direct recourse to the loan repayments that the underlying borrower will continue to pay APF. Any contractual claim for the assignment of the loan repayment wouldn't rank any higher than other creditor claim. Maybe I'm missing something (which is why I raised the query), but the structuring of this loan via APF would appear to expose lenders fully to APF's credit without mitigation. Not a show stopper, but does mean that you have to get comfortable with APF's credit which is difficult given the companies were only recently incorporated and have no publicly filed financials. Loan is to APF and APF is in turn making a loan to underlying borrower. Its up to APF to claim on security if underlying borrower defaults, but APF will still be expected to continue payments of the loan to AB. If APF defaults, then AB claim on the assigned security, independent of whether or not the underlying borrower defaults, otherwise there is no point assigning security if you can't use it when needed If AB don't have step in rights to continue the loan (I am not sure in this case), then AB may come to an agreement in some way for the underlying borrower to pay off APF loan to AB and chase up APF themselves. But the risk lies with the underlying borrower as they have agreed to the assignment of the security when taking out the loan with APF.
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