hazellend
Member of DD Central
Posts: 2,363 
Likes: 2,180
|
Post by hazellend on Apr 15, 2017 8:27:43 GMT
My gut feeling, for what it's worth (not very much!), is the purchaser of this pub knows quite a lot about the business, and probably a lot more than we do.
Why would they bother with this exercise if they didn't think they would end up making decent money from it?
The current pub is making 86,000 profit per year (from memory without looking at the VR) so if they increase the profit as planned it is a very nice yielding investment at 1million.
I'm in the second charge so probably won't put any into the first charge, although if I have some funds clear I would be happy to put some into the first charge as well.
I don't worry about the secondary market, mostly because I don't tend to buy loans that I won't hold to term, but the second charge is amortising anyway.
|
|
kaya
Member of DD Central
Posts: 1,150
Likes: 718
|
Post by kaya on Apr 15, 2017 8:33:51 GMT
That's a fair point. I do have some faith in the BK group.
|
|
|
|
Post by dan1 on Apr 15, 2017 8:46:40 GMT
I also put a fair amount of faith in ABL. There are now 5 loans connected with this pub loan borrower, if one were to default the knock-on problems for the other loans and ABL may not be good.
ABL have 3 borrowers (or connections0 with the bulk of the loans on the platform - A***** C*********/P******* F******, B******N**** & C****** G****. And the first two are connected by 060.
|
|
SteveT
Member of DD Central
Posts: 6,875
Likes: 7,924
|
Post by SteveT on Apr 15, 2017 8:57:18 GMT
I'd much rather be in this loan at 12% than in something similar on FC at perhaps 9% or 10% (8% or 9% after fees) with nothing behind it beyond a PG.
|
|
JamesFrance
Member of DD Central
Port Grimaud 1974
Posts: 1,323
Likes: 897
|
Post by JamesFrance on Apr 15, 2017 9:44:39 GMT
blender I did say that not reading the valuation report was entirely my own fault, however I do think that when a headline LTV is shown it should be based on a real valuation of an asset backing the loan. Otherwise it should be labelled as an SME loan and not a commercial property loan. Reading through lots of downloaded information is fine for heavyweight investors making a few large loans but impractical for those of us who just diversify. I have several thousand loans on many different platforms. I am obviously not too familiar with Ablrate.
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Apr 15, 2017 11:28:10 GMT
I would say the average person investing in P2P and becoming more so all the time with IFISA's getting more publicity are just investing due to the rate.Most forum members have been doing this a while and know how to do DD but many new to this are just trusting the company has done it for them.And to be fair you have to trust Ablrate know more then the average person on the in's and out's of a deal(which i do) but it would pay to do some DD yourself if it does not feel right.At the end of the day if you want to invest in property but want an easier method you have investment trust's yielding about 5% and with growth of 30% over 3 years which take most of the thinking out of your hands, but i like to do both.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 15, 2017 11:45:25 GMT
James France. I have deleted my post critical of yours. On the front page of the loan details there is no mention of property valuation and LTV, but you have downloaded the borrowing proposal and it does say the property is was valued at £1M in March and the LTV for the 12% loan is 50%. You have a point that you should be able to rely on this without having to download the valuation and crawl though the detail.
|
|
elliotn
Member of DD Central
Posts: 3,064
Likes: 2,681
|
Post by elliotn on Apr 15, 2017 11:58:53 GMT
James France. I have deleted my post critical of yours. On the front page of the loan details there is no mention of property valuation and LTV, but you have downloaded the borrowing proposal and it does say the property is was valued at £1M in March and the LTV for the 12% loan is 50%. You have a point that you should be able to rely on this without having to download the valuation and crawl though the detail. I haven't gone back but to avoid anyone thinking this has a million pound property behind it, I believe it was valued as a going concern based on its ebitda not bricks 'n' mortar.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 15, 2017 12:46:31 GMT
Thanks Elliottm. Yes. Based on the predicted success of the intended business development.
|
|
elliotn
Member of DD Central
Posts: 3,064
Likes: 2,681
|
Post by elliotn on Apr 15, 2017 13:53:40 GMT
The property value would be very useful to know though as a backstop, ebitda's are less useful in a recovery.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 15, 2017 18:35:11 GMT
The property value would be very useful to know though as a backstop, ebitda's are less useful in a recovery. It's a commercial property. Do we know what part of the loan (minimum loan £350k) pays for the building acquisition in the following - can't be much.:
'The funds are required to finance the costs of acquiring the part freehold / part leasehold building known as [address], (“the Property”), the costs of acquiring the associated trading business [name of business] as a going concern, associated legal and professional costs and initial building works (ahead of a full refurbishment).'
That is from the Borrowing proposal, page 3, and note that the building, not the building and business, is defined as the property. Then in the same Borrowing proposal on page 2
'... the part freehold / part leasehold property known as [address]. This property was valued in March 2017 at £1,000,000.
The Property is a themed cafe bar / restaurant trading as [name of business] and is fitted out to a high standard.'
The property is in one place the building and in another the building and the business. The building is clearly worth much less than £1M as bricks and mortar. Even if you accept that the £1M property includes the business, you are surely at least entitled to believe that the existing business and building, being purchased, was the subject of the valuation in March.
So unfortunately, on reflection, I had to accept JamesFrance's point. To clear this up, the Borrower should give the price being paid for the building. (Please correct anything wrong here)
|
|
JamesFrance
Member of DD Central
Port Grimaud 1974
Posts: 1,323
Likes: 897
|
Post by JamesFrance on Apr 17, 2017 7:46:31 GMT
The only basis given for this valuation at one million pounds is a calculation of 5.5 times the EBITDA which the business hopes to achieve for the year ending August 2017. The previous year actual profit is under half this figure.
As far as I am aware a business is valued on existing numbers so the normal valuation on that basis would be roughly half a million. Yes I do watch Dragon's Den.
So not only is there no property valuation giving 50% LTV, this business valuation should not be used for that either and is simply an opinion of what the business might be worth if hoped for future profits actually materialise.
|
|
|
|
Post by ablrate on Apr 18, 2017 17:12:58 GMT
whooaa... lots of questions to catch up on...
On it.
Regards
Ablrate
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Apr 20, 2017 16:52:17 GMT
does it count as another question to ask for the answers?  |
|
|
|
Post by ablrate on Apr 20, 2017 16:55:51 GMT
does it count as another question to ask for the answers? As you are new... strike one.... (but actually very funny, so OK..lol) I have put the questions to the borrower and I am awaiting the answers. Best Ablrate
|
|
