For this particular project, there is no Risk Scoring as this is a business loan. There is no Risk Scoring to be imported from the originator.
Catherine Quirc Furnishings Limited (CQFL)
Commercial Unit 1 and 2 the Forge, Straffan, Co. Kildare
A first fixed charge over the property
7% per annum (paid monthly)
LTV (Loan to Value)
36 months (12 month minimum)
The purpose of this loan is to provide a commercial mortgage to the owner of Units 1 and 2 of the Forge, Straffan, Co. Kildare. The property comprises 2 commercial units and 2 apartments on the first floor. The owner of the building is seeking an equity release on this property in order to use it in an associated company. We have agreed to release €400,000 while taking charge over the 2 commercial units only.
A valuation conducted by a local agent on the 5th of November 2020 has valued the property at €710,000.
The LTV on this project is 56% and the income to mortgage cover is 1.46 which demonstrates strong repayment capacity. The borrower will be paying interest and principal payments on a monthly basis.
Trading During COVID Lockdowns
Tenants were given relief during the lockdown months in both June and July 2020 and Jan – April 2021.
Some of the relief granted this year was to ease any cashflow pressure due to lockdown, but will be invoiced and payable down the line when normal business trading resumed. All tenants rents will be paid in line with their leases from start of June 2021. There are no outstanding debts on rents invoiced to date.
Should another lockdown materialise and the borrower agrees to further rent concessions as before, from 25-50%, then there will still be sufficient rent to service the loan. If there is a deficit the CQFL shareholder will make it up.
The borrowing entity CQFL is run by a successful local businesswoman and successful property developer and investor Noel Murphy. Two leases related to the property, Forge Furnishings and Quirc café are owned and operated by the principals of CQFL.
Property and Location;
The property is located in the heart of Straffan village, Co. Kildare and a 1-minute drive from the K Club. The 2 ground floor retail units extends to an area of 4,756 sq ft and is accessed directly from the main street. Two of the leases in place are connected parties to the landlord namely the Forge Furnishings and Quirc café, the rents given the specified uses are also in line with the market rental levels. We are also advised that a wine licence is in place which adds a greater attractiveness to the property in the event of a sale on the open market.
Taking all factors into consideration, it is envisaged that there would be good demand for the subject property in the event of a sale in the current market. Straffan village has a very limited existing supply of commercial stock.
Unit 1 which contains Quirc café, Quirc interiors and Langrell Kitchens extends to an area of 3,594 sq ft.
Unit 2 is occupied by Simplicite Beauty extends an area of 1,162 sq ft. The unit is self-contained.
The passing rent of the property is circa €70,000. This provides a monthly income of €5,833.33.
The payment profile of the loan is represented below. The borrower is required to pay €3,595.31 per month which includes interest and principal. At the end of 3 years, the balance of the loan will decrease to €349,421.87. Assuming not capital growth in the building, the LTV after 3 years will stand at 49%.
With a passing rent of €5,833.33, less management fees of 10%, the rent to mortgage cover is 1.46 times. This is a good starting position for the loan with a comfortable amount of cover. The payment of principal ensures the financial profile of the loan is improving over time.
Key Risks and Mitigations
At the end of 3 years, the balance of the loan will be €349,421.87. The borrower will either seek to refinance during year 3 or seek to sell. The sale may take the form of individual units as there has been interest expressed by existing tenants.