Descripton

Offering Description

Loan Progress

Renovation works at the Shandon Street property have been progressing well since we raised the first tranche of €100,000 of the €420,000 facility in May.

The Contractors remain on schedule to finish the renovation works within the agreed 6-month schedule. A new ground floor slab has been installed, including insulation and drainage. First, fix plumbing and stud work has commenced and the installation of a new roof has started.

Our QS has visited the property and is in agreement with the value of works completed so far. Accordingly, we are now raising tranche 2 of this facility for a further €100,000 at an interest rate of 8%. The term of this tranche is 12 months with a minimum interest period of 4 months.

When all works are complete the Borrower will have 4 apartments which our Valuer has valued at a combined total of €720,000. Our debt will be refinanced by a long term mortgage as the Borrower plans to let these apartments.

Please refer to the original credit paper for more details on this proposal.

Loan Overview

The Borrower is Catheason Investments Ltd. They have requested that we provide them with a €420,000 bridging facility for a period of 12 months (4 months term certain), which will be drawn down in four tranches (€100,000, €100,000, €100,000 & €120,000). The loan will be secured against the Property. The Borrower requires this facility to assist them in the conversion of 50a Shandon Street into 4 apartments.

The interest rate for lenders on this loan will be 0.66% per calendar month, which equates to 8% per annum. The Property comprises 50 & 50a Shandon Street, which presently have a combined value of €275,000. Based on this valuation, our LTV (Loan To Value) will be 36%, when Tranche 1 is drawn down.

The Borrower has planning permission to convert 50a into 4 apartments, which this facility will assist in the finance of. The building works are estimated to take about 6 months, at which time the apartments will be rented out on long term leases. This facility will then be repaid by a long-term mortgage which the Borrower will enter into.

Risk Warning

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The Borrower

Catheason Investments Ltd is a developer which sources small redevelopment opportunities in the Cork area. Their modus operandi is to find properties which require significant work, but where the locality has strong rental demand. They employ the services of reputable building contractors, such as DNCF, who will be working on this project, to convert/refurbish the properties and then rent then out on long term leases. The Borrower employs a full range of advisors, including Legals, Tax and QS on all its projects.

Security

The loan will be secured by a first legal charge over the Property which comprises two houses 50 & 50a Shandon Street. 50a, which is being converted, is at the rear of 50. We are taking security over both properties, to give us a strong LTV and for practical reasons as they are interconnected. After 50a is converted and this facility is repaid, the Borrower plans to convert 50, once it receives the necessary planning.

When the first tranche of €100,000 is drawn down, we will have an LTV of 36%. This LTV will rise as the relevant works are carried out. When Tranche 4 is fully drawn down we will have an LTV of 58% based on a Gross Development Value of €720,000.00.

Property

We have commissioned an independent valuation of the existing houses and the development value of the 4 apartments in 50a, which has confirmed the valuations as follows.

House                     Sq ft             Description                        Valuation                

50 Shandon St                                                                   

50a Shandon St                                                                   

                               4685                                                      €275,000

Apt 1                       420                 1 Bedroom

Apt 2                       484                 1 Bedroom

Apt 3                       420                 1 Bedroom

Apt 4                       1119               3 Bedroom

                                                                                            €720,000

The properties which are located at the Popes Quay end of Shandon Street, are currently in need of major refurbishment. When the works are completed, the new façade that they will provide will add greatly to the regeneration of this area of Shandon Street.

The property was previously in use as a ground floor retail unit with owners accommodation at first-floor level and 4 bedsits overhead. To the rear of the property is a former grain store which was subsequently used as a furniture-making workshop.

We have employed our own QS advisors to confirm the costings for the proposed work are adequate prior to the drawdown of Tranche 1, and they will confirm all the proceeds of Tranche 1 have been correctly accounted for before Tranche 2, 3 and 4 is drawn down.

Location

Shandon Street is just minutes’ walk north of the city centre with a high volume of passing traffic and pedestrians. 50 and 50a are located at the city end of Shandon Street. There is a strong demand for good quality apartments in the area, with UCC, The Mercy Hospital and Apple located nearby. The properties are a 10-minute walk from Patrick’s Street, which would be viewed very positively by the young market which would look to rent out the apartments.

Exit

It is proposed to have a term of 12 months on this facility. This term will allow the borrower to complete the 4 apartments and source a long-term mortgage which will be used to repay our loan facility. The Borrower will have the ability to repay the facility after month 6 either partially or in full.

Conclusion

The Borrower has requested a loan facility to assist them in the conversion of 50a Shandon Street into 4 apartments. The loan will be repaid by a long-term mortgage.

The Borrower has a well-resourced, reputable team that will complete the works in a timely manner.

Given the location of the Properties the level of LTV, and the level of return for our Lenders, we are happy to recommend this facility.