Termonfeckin Bridging Loan

 Development loan
Drogheda,
Ireland
7.5%
Annual yield
50%
LTV
Term: 15 months
Interest payment schedule:
At Project Completion

Descripton

Credit Report

Borrower

Taafe Egan Developments Ltd

Property

Units 1, 2, 9 & The Bungalow Termon River, Termonfeckin, Co.Louth.

Security

 First legal charge over the property

Facility Amount

 €1m (Tranche 1 - €600k Tranche 2 - €400k)

Gross Development Value (GDV)

 €1.365m (€1.2m Ex VAT) Termon River

 €.4m new site in Louth

Interest

 7.5%

Purpose

 Bridging Facility

LTV (Loan To Value)

 Tranche 1 50%, Tranche 1 & 2 62%

Term

 15 months (6 months minimum)

Repayment

 Refinance

Loan Overview

The Borrower is a well-known and respected construction/development firm in the Louth area. They have requested that we provide them with a €1m bridging facility for a period of 15 months (6 months term certain), secured against the Property. The Borrower requires this facility to refinance an existing loan against the development and to allow them to release equity to fund another development in the Louth Area.

The interest rate for lenders on this loan will be 7.5% per annum. We will take a charge over the Property. Initially, our LTV (Loan To Value) will be 50% and may rise to 62% if the Borrower draws down Tranche 2.

The Properties which we taking as security for this facility are 4 houses in the Termon River Estate, which the Borrower has recently developed in Termonfeckin. The estate comprises 10 new build houses and 1 bungalow refurbishment. There are 7 contracted sales for the estate, which are due to complete in the next few weeks.

Risk Warning

Although all our loans are secured against property, your capital is at risk and returns are dependent on the Irish property market. Estimated returns and past performance are not reliable indicators of future returns. Property Bridges provides due diligence and work with independent professional service firms to ensure your loans are thoroughly assessed and accurately represented. Please read Property Bridges Terms and Conditions for more detailed terms and conditions to which users of propertybridges.com are subject.

The Borrower

Taaffe Egan Developments is regarded as a reputable house builder and main contractor in the North East. The principles behind the firm Frank Taafe and J.P. Egan have many years experience in the residential construction industry and have an in-depth knowledge of the North East property market. They have built a very experienced management team underneath them in TE Developments. In the last few years, they have completed a number of significant developments such as Donacarney Wood (Mornington, Co. Meath) The Burrows (Bettystown) and Blackbush Lane (Drogheda). They propose to use the funds from this loan facility to refinance existing debt against the site and to release equity to allow them to purchase another site in the County Louth area.

Security

The loan will be secured by a first legal charge over the units 1, 2, 9 and The Bungalow in the Termon River Estate. If and when Tranche 2 will be drawn down, we will put in place a charge over the site purchased with the proceeds.

Property

We have commissioned an independent valuation on the 4 houses, which has confirmed the valuations as follows.

House                     Sq ft             Description                        Valuation       Net of VAT

The Bungalow         1,350            4 Bedroom                        €260,000       €229,000

House 1                  1,420            4 Bed, 2 story detached          €365,000       €321,500

House 2                  1,420            4 Bed, 2 story detached          €365,000       €321,500

House 9*                 1,420            4 Bed, 2 story detached          €375,000       €330,000

Temon River is a small development of 4 detached, 6 semi-detached houses, and a bungalow, in a courtyard setting beside the Drogheda road leading into Termonfeckin. The Valuer has commented that the development is finished to a high standard. Sales for the remaining 6 houses, which we are not taking as security, are now complete. 

Termonfeckin is located c.4 miles north of Drogheda. It has a population of c.1,600 people. It is seen as a feeder village for the greater Drogheda area, which has a population in excess of 50,000. The village is popular for its beach and numerous golf clubs, such as Baltray, which is c.1 mile from Termon River.

The Borrower proposes to let the 4 houses in the short term, with a view to either selling them at the expiry of the loan or to refinance them on a long term basis.

Should the Borrower seek to drawdown Tranche 2 of the facility, we will ensure that the purpose of the facility will be to purchase a site for residential development in the Louth area. This tranche will be secured by the new site and the 4 houses in Termon River. This would see the LTV rise from 50% to 62%. Lenders will be informed at the time of the funding request, what is being purchased with Tranche 2.

Exit

It is proposed to have a term of 15 months on this facility. This will allow them to either refinance us with a long term mortgage or the facility will be repaid from the sale of some of the units or from other company proceeds. The Borrower will have the ability to repay the facility after month 6 either partially or in full.

Conclusion

The Borrower has requested a bridging facility of €1m, split into 2 tranches. The first for €600,000 and the second for €400,000. Tranche 1 will be secured against 4 houses, with a current value of €1.2m. Tranche 2, if it is drawn down, will be secured by the 4 houses and the site that will be purchased. These transactions will see the LTV starting at 50% for Tranche 1 and rising to 62% for Tranche 1 and 2 combined.

The Borrower is a well-regarded builder/ developer in the Louth area, with a history of completing small to medium housing developments to a high standard.

Given the strength of the security, the quality of the Borrower, and the strong return for our Lenders, we are happy to recommend this facility.

Project originated by:

Documentation

7.5%
Annual yield
50%
LTV
Term: 15 months
Interest payment schedule:
At Project Completion