Descripton

Offering Description

Loan Overview

This is a bridging loan to Baybush Developments Ltd. The company is a newly created SPV with a development team assembled and headed by a project manager with extensive experience for a well-known construction firm who manages similar projects.

The Property consists of two adjoining properties being 211A Baybush, a residential house (the “Residential Property”) and 211B, an adjoining commercial office (the “Commercial Property”). The Borrower seeks to split the folios and obtain planning permission to construct 1 or 2 residential units on the area of land of the Commercial Property. The purpose of this loan is to allow the Borrower to refinance their existing loan and to take a part of the Property (being the Commercial Property) through the planning process to secure 1 to 2 additional residential units. The planning application should take approximately 2 to 4 months. Upon securing the planning permission, the Borrower will seek a refinance in order to develop the 1 or 2 residential units.

Should the Property fail to secure the planning permission, the Borrower will seek to sell the Residential Property. The estimated valuation of the Residential Property is €450,000 and is in excess of the loan amount sought.

Both the Residential Property and the Commercial Property are valued at €650,000 by a qualified valuer in the April 2020 and the bridging loan sought is for €350,000 or 54% of the valuation.

Since purchasing the Property, the Borrower has invested circa €300,000 in improving the Property.

The Loan

The proposed bridging loan has a maximum term of 18 months and a minimum interest period of 12 months. This means that lenders will receive at least 12 months’ worth of interest payment even if the Property sells and the loan is repaid before the expiry of the 12 month term. 

The loan carries an interest rate of 0.66% per month which is the equivalent of 8% per annum. 

The loan is secured by a charge over the Residential Property and the Commercial Property and by a charge over the shares in the Borrower company. This effectively gives the lenders the right to sell the Property if the loan is not repaid at the end of the loan period.

Risk Warning

Property Bridges has compiled this report on behalf of our lenders and have taken reasonable care to ensure the information provided is authentic and accurate. Please be aware that returns are not guaranteed, and your capital is at risk. Please also note that the term is not certain and may be extended under certain circumstances. Investors should seek their own advice before investing. 

The Borrower

The Borrower is a company that has assembled a development team headed by a project manager who has extensive experience working for a well-known construction firm who manage similar projects.

We will seek its incorporation documents as part of our legal due diligence and our security will include a charge over the shares of the company allowing us control in the event of default.

As there is no prior trading there is no trading, profit and loss or financial position to consider.

Security

The principal security for this loan is a charge over the Residential Property and the Commercial Property and by a charge over the shares in the Borrower company.

Property Details

The Residential Property is a semidetached bungalow consisting of three double bedrooms and two bathrooms. It comprises of 2,690 square feet. Properties comparable to the Residential Property in the area include;

The Commercial Property is a semidetached commercial property consisting of three large offices and a bathroom. It comprises of 1,430 square feet. Comparable properties to the Commercial Property in the area include;

Since purchasing the Property, the Borrower has invested circa €300,000 in improving the  Property.

Location:

The Property is situated on the outskirts of the village of Straffan and is easily accessed via the nearby M4 and M7 motorways, and a 35 minutes drive from Dublin City Centre and 40 minutes drive to Dublin Airport. It is within easy reach of the neighbouring towns of Celbridge, Clane and Maynooth and the major international employer Intel at Leixlip. It is located along the well serviced Bus Eireann route 120 to Dublin.

Planning

Planning will be examined as part of our normal legal due diligence but the Residential Property is currently used for residential purposes – and we do not expect to encounter any issues around planning.

Term and exit

It is proposed to have a term of 18 months on this facility.

We do not expect that the sale and subsequent closing period will take 18 months but have allowed this term to cover any eventualities. 

There is a built-in 12-month minimum term therefore even if the property were to sell immediately and close within a normal 1 to 2-month timeframe all lenders will earn a minimum of 8% on their short-term investment.

In regards to the exit, the Borrower seeks to split the folios and obtain planning permission to construct 1 or 2 residential units on the area of land currently set up as a Commercial Property. The purpose of this loan is to allow the Borrower to refinance their existing loan and to take a part of the Property through the planning process to secure 1 to 2 additional residential units. The planning application should take approximately 2 to 4 months. Upon securing the planning permission, the Borrower will seek a refinance in order to develop the 1 or 2 residential units.

Should the Property fail to secure the planning permission, the Borrower will seek to sell the current residential unit. The estimated valuation of the Residential Property is in excess of the loan amount sought.

The Property is valued at €650,000 by a qualified valuer in the April 2020 and the bridging loan sought is for €350,000 or 54% of the valuation.

Conclusion

This is a bridging facility secured against a property. The following factors make this a strong investment;

- The investment is for 18 months but has a minimum term of 12 months guaranteeing a minimum return of 8%.

- The property is in an area that in demand from locals and also has great connectivity and is close to both the N7 & M4 Motorways for those working in Dublin. 

- The Borrower has assembled a development team headed by a project manager with extensive experience working for a well-known construction firm who manage similar projects.

- Our loan-to-value (LTV) rate of only 54% provides significant comfort even in the event the Property did not achieve its full asking price of €650,000.

- Strong security where should the Borrower fail to secure the planning permission for 1 to 2 additional units, the Borrower can sell the Residential Property which has a value in excess of the loan term sought.

- Since purchasing the Property, the Borrower has invested circa €300,000 in improving the Property.

Please refer to the Facility Agreement for a full disclosure of terms.