macq
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Post by macq on Jun 2, 2017 17:29:55 GMT
The group business is an FCA regulated company with all that this entails.... with a lawyer and an ex-PLC director amongst the directors. If fraud risk is what you are concerned about the group holdings company would be happy to put an corporate guarantee. APF are good partners of ours and we don't consider fraud risk material, or we wouldn't be doing deals with them, but happy to arrange the corp guarantee if it increases comfort. not sure most people were thinking of fraud but more in the way of general problems but if it increases peoples peace of mind & is not a problem to arrange would it not be worth adding?
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stevio
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Post by stevio on Jun 2, 2017 18:00:34 GMT
The group business is an FCA regulated company with all that this entails.... with a lawyer and an ex-PLC director amongst the directors. If fraud risk is what you are concerned about the group holdings company would be happy to put an corporate guarantee. APF are good partners of ours and we don't consider fraud risk material, or we wouldn't be doing deals with them, but happy to arrange the corp guarantee if it increases comfort. Do the other loans for this borrower have a corporate guarantee?
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Jun 2, 2017 18:47:54 GMT
@sq or any other poster I apologise if you believed my initial comments to be directed your way. I have learned so much today from @sq s postings, as always, and now understand where your questions and statements come from. I also, as I said, use limits to same borrowers elsewhere on p2p where there is a clear and total connectivity between all assets. I had not reached this by your reasoning but you have added further fuel that may see me reducing exposure further in that area. Thanks for the input. ozboy and registerme thanks for your direction also. Its what makes being a member on here so worth while.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jun 2, 2017 19:15:37 GMT
@sq or any other poster I apologise if you believed my initial comments to be directed your way. I have learned so much today from @sq s postings, as always, and now understand where your questions and statements come from. <snip> Apart from, it seems, their actual user name ... Never mind @tubs8535 its the thought that counts
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sg
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Post by sg on Jun 2, 2017 19:19:03 GMT
stub8535 - Don't sweat it. I'm used to much more robust argument (basically vitrilolic abuse) on football supporter forum's. This forum is the equivalent of tea with a maiden aunt who's the daughter of a country vicar lives on her own and doesn't have a tv !
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nick
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Post by nick on Jun 2, 2017 19:33:09 GMT
The group business is an FCA regulated company with all that this entails.... with a lawyer and an ex-PLC director amongst the directors. If fraud risk is what you are concerned about the group holdings company would be happy to put an corporate guarantee. APF are good partners of ours and we don't consider fraud risk material, or we wouldn't be doing deals with them, but happy to arrange the corp guarantee if it increases comfort. Fraud is always a risk, whether it is at director level or more likely at a lower down employee level. However, this somewhat missing the point that there remains a risk that funds received from the underlying borrower are not directed to lenders for whatever reason, including fraud, but also if the business has undertaken other activities which results in strained cash flow and ultimately insolvency. My point remains that fundamentally we are exposed to APF's credit risk which is incremental to the risk we would otherwise be exposed if we lent direct to the underlying borrower. It is disappointing that this residual risk has not been been flagged or given any real consideration in the borrowing proposal. What would provide a lot of comfort to lenders is if the underlying borrower were to agree to make loan repayments into an escrow account or to Ablrate (rather than direct to APF) so that lenders retain control of cash flow from the underlying borrowers - this is usual protection that a bank would insist on, although I understand that this is may not be to be commercially viable if APF are sensitive to the optics of Ablrates' involvement.
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Post by epicurean on Jun 4, 2017 20:38:20 GMT
- From what I can work out this is a loan to APFL as an operating business and as their business happens to be making loans the security they are offering and repayment are related to loans, but this is not a true loan-on-loan wholesale lending arrangement. I've no doubt this complies with the letter of the relevant regulations but I'm dubious about whether it complies with the spirit of them. - I would want to know the full details of the underlying Sig*****e loan as this is claimed to be the source of repayment (and as lenders seem to be effectively relying on APFL's underwriting skills to repay their loan) - The valuation assumes that planning can be successfully sought for a new development (of what?). If planning permission is not received the value of the land is not £995k. I imagine the value today for the land without planning permission (and with 3 derelict buildings yet to be demolished) is far lower than £995k which makes the 75% LTV quoted misleading in my view. I note another lender has agreed to refinance the Sig*****e loan only on the condition of planning permission being successfully received. - The valuer also assumes no contamination at the site which is a bold assumption to make given history of a fire and their later comments about asbestos risk (the valuer recommends appropriate investigations are made before completing a transaction). - The valuer has also not seen a report on title presumably because one doesn't exist so there could be other charges on the property or the borrower may not even own the property. Again the valuer recommends one should be completed. - Land is normally valued on a residual basis (rather than comparable). This is where the valuer solves backwards from GDV to work out what a prospective developer can afford to pay for the land and still make an acceptable profit (typically c.20% on cost). The current comparables quoted are shockingly bad. I have no idea how the valuer has come to £995k. - I'd echo the good points made around interconnected loans. It looks like a complicated question to answer and I'd expect to see a note from a lawyer acting for Ablrate explaining exactly how enforcement would work.
I have other relatively minor points but the key questions for me are what is the value of the land today and what exactly is the arrangement with APFL.
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blender
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Post by blender on Jun 4, 2017 22:25:19 GMT
We do know a little more than that. We are told that outline planning permission has been received, though curiously the valuation was made without that knowledge. Dated 25th April, "It is assumed that the site shall be demolished and planning sort (sic) for a new development to be erected in its place.' - valuation p.8. An unexpected spelling error there and rather a strange concept of demolishing a site, rather than demolishing buildings to clear a site. We can deduce that the loan to S.. cannot be less than £760k, because we are invited to lend up to that much to refinance the loan. But that does not mean that the £760k is wholly associated with that one project. We do not know the purpose of the loan being refinanced, just that this site is the main security. We are not interested in the development, except inasmuch as it may affect the present valuation of the site as security. You would think that the valuation of the development proposed in the successful outline planning application would be relevant to the present value of the property. There are some key numbers here which are not shared; the purchase price of the properties and the ransom strip, the cost of site clearance and development, the GDV. I trust that Ablrate knows more than we do. Ps. I have lent on this one and many more from this stable.
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sirius
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Post by sirius on Jun 5, 2017 10:17:11 GMT
Thank you epicurean and blender for your concise overviews of this rather complicated and imprecise loan. Very thought provoking........................
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blender
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Post by blender on Jun 5, 2017 12:33:30 GMT
Thank you epicurean and blender for your concise overviews of this rather complicated and imprecise loan. Very thought provoking........................ Thank you Sirius. I think I should add that while I have suggested that there is very relevant information which is not being shared with us, to be fair I could understand why numbers which would quantify the potential profit for a future development would be kept as tight as possible, because with a p2p funding what you say to potential lenders is in effect public. For example, where full planning consent has not yet been obtained, the release of such information could have unfortunate consequences on potential GDV and profit, and therefore on our security as lenders. My comfort is my belief that our interest and Ablrate's are bound together, and that Ablrate will know more than we do, even if information may not be shared. This is not FC, where the fates of individual loans do not affect the operator (except perhaps that property loan). A degree of trust is needed.
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macq
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Post by macq on Jun 5, 2017 12:56:04 GMT
I do sometimes wonder when reading the documents etc on the loans why i feel i know more then the company and while you do need to do DD whether i end up with more question & doubts because of it.And should i not just trust the company know there business and how to run it, unless this is your line of work how can you tell? Am sure some people have taught themselves over the last few years which is why this forum is so helpful.
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Post by ablrate on Jun 5, 2017 14:10:46 GMT
- From what I can work out this is a loan to APFL as an operating business and as their business happens to be making loans the security they are offering and repayment are related to loans, but this is not a true loan-on-loan wholesale lending arrangement. I've no doubt this complies with the letter of the relevant regulations but I'm dubious about whether it complies with the spirit of them. - I would want to know the full details of the underlying Sig*****e loan as this is claimed to be the source of repayment (and as lenders seem to be effectively relying on APFL's underwriting skills to repay their loan) - The valuation assumes that planning can be successfully sought for a new development (of what?). If planning permission is not received the value of the land is not £995k. I imagine the value today for the land without planning permission (and with 3 derelict buildings yet to be demolished) is far lower than £995k which makes the 75% LTV quoted misleading in my view. I note another lender has agreed to refinance the Sig*****e loan only on the condition of planning permission being successfully received. - The valuer also assumes no contamination at the site which is a bold assumption to make given history of a fire and their later comments about asbestos risk (the valuer recommends appropriate investigations are made before completing a transaction). - The valuer has also not seen a report on title presumably because one doesn't exist so there could be other charges on the property or the borrower may not even own the property. Again the valuer recommends one should be completed. - Land is normally valued on a residual basis (rather than comparable). This is where the valuer solves backwards from GDV to work out what a prospective developer can afford to pay for the land and still make an acceptable profit (typically c.20% on cost). The current comparables quoted are shockingly bad. I have no idea how the valuer has come to £995k. - I'd echo the good points made around interconnected loans. It looks like a complicated question to answer and I'd expect to see a note from a lawyer acting for Ablrate explaining exactly how enforcement would work. I have other relatively minor points but the key questions for me are what is the value of the land today and what exactly is the arrangement with APFL. We will get to the questions here and have answers shortly - however one sticks out: "The valuation assumes that planning can be successfully sought for a new development (of what?) ( as in the doc HMO (Houses of Multiple Occupancy. I.e Flats - page 3) . If planning permission is not received the value of the land is not £995k. I imagine the value today for the land without planning permission (and with 3 derelict buildings yet to be demolished) is far lower than £995k which makes the 75% LTV quoted misleading in my view. I note another lender has agreed to refinance the Sig*****e loan only on the condition of planning permission being successfully received. Borrower: "The £995 is what it is worth now, not GDV etc. Hence the valuation. If GDV was quoted, that is what will have been detailed in the doc"
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sg
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Post by sg on Jun 5, 2017 15:11:24 GMT
... A degree of trust is needed. Trust everyone, but always cut the cards. Ablrate have earned themselves a lot of trust from me over the last couple of years I've been with them, and have an ever increasing chunk of my money because of it, but even if it was my Mother floating this proposal I'd be looking at all the paperwork and asking questions !
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blender
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Post by blender on Jun 5, 2017 15:15:08 GMT
You are right sg. Ablrate has just quoted the borrower saying that the site is worth £995, and I've offered to lend more than that myself.
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oldgrumpy
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Post by oldgrumpy on Jun 5, 2017 15:27:45 GMT
Doesn't a lot of scepticism on certain platforms stem from the platforms just believing and/or accepting anything the borrower tells than rather than obtaining actual independent evidence? (PS I'd offer the borrower treble £995 for the site "as is", then he'll make a 200% profit )
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