Development Plot, Liverpool DEFAULT (FS)

Inasmuch as this loan isn't shown to be the first tranche of a larger development loan, ISTM that the borrower simply is raising more funds -- for no specified purpose -- based on the increased value of the land resulting from the PP approval. Perhaps they intend to use the funds to start on the development before they've arranged their development financing, but FS haven't suggested that's the case.

As for the new valuation... it's extremely sensitive to the capitalisation factor applied, and 5% strikes me as incredibly optimistic. Especially as it's applied to an annual income that hasn't been reduced at all by any expenses or voids.

Using a more conservative 7% capitalisation factor, but still applying it to the £150k gross income, results in a value of just £175k! (That's £150k/7%, less the £1,969k build costs.) That's not even as much as the existing £245k loan.

And wasn't it FS that used what they referred to as a conservative 10% capitalisation factor, rather than a more optimistic 7.5% factor, for another property valuation?

I can accept that a different capitalisation factor might be appropriate in this case because of the structure of the operating agreement, but ISTM that using 5% and applying it to a gross income amount seems unrealistically optimistic. However, I have no experience in this field, so I'd appreciate any input others might have.

Agreed; loans on the plot have been running since May 2016 gradually increasing to pay the interest, and no work done to develop the site. The additional borrowing loan for £100k is subordinate effectively a second charge and been running for over a year. Cant refinance because cant raise enough money to pay off FS loans because the valuation is too high thats my guess. The comments from FS over the last year are comical. Now they say discussions with new lender for part repayment in exchange for a second charge, meaning some of the current FS first charge is returned to lenders and the balance becomes a second charge and the £100k additional borrowing becomes a 3rd charge. Even when that is put into place (if it happens) the whole thing will drag out for some time yet until the site is developed. If it is not developed the owner will not be able to keep up the interest payments with new lender and FS because they cant find ways of increasing the value of the site to raise new money. With no development finance loan will default then get sold on the cheap. FS lenders get a severe haircut. The new 3rd lenders lose the lot. Better hope it gets developed

Another promise of repayment in a few days. After the loan update mooting a partial repayment in exchange for a second charge FS haven't bothered to clarify whether the repayment they're expecting will be a full repayment, part repayment or part-exchange for some magic beans. 

well today viz nearly 2 months later we have had a partial payment
i.e. per £25 investment I have had


Interest earned from loan 2355178947A 02/11/2018 13:02 £0.00 +£2.14

Capital Return from loan   2355178947A 02/11/2018 13:01 £0.00 +£11.57

Well why is this so confusing - I think this is £227 repaid out of £600K
but there is still the 100K supplementary loan? 
Think we would not check it FS?
Please tell me if I am wrong.

well that didn't take long did it! 

So FS have lost the first charge and now are the second charge holder which basically means, as I see it, they are at the whim of the first charge holder. This one is part of the portfolio held by a character who clearly knows how to play the system and he is connected to a leading top class lawyer whom I suspect has completely outsmarted the FS legal team...

I am in this one and I am really worried by this move - I was hoping for 50% of my zombie loan book to be recovered and now I am down to 10%! 

Unfortunately the administrators running this shambles simply do not give a s**t ... much the same as the admin thieves looking after lendy et al. They are gonna get there pound of flesh with no regards to investors whatsoever... basically they dont care.