|Criteria||From a+ to d||Project rating|
Macro Location Analysis
EvoEstate Risk rating is of an informative nature only & can not be considered investment advice.
Loan To value
Eagle Dawn Limited
Development site for 6 homes at Dublin Road, Celbridge, Co. Kildare.
First legal charge over the site and the houses to be constructed thereon.
Tranche 2 – First Development Drawdown
Net Development Value
(NDV Ex VAT)
7.0% to be rolled up and paid when the facility is repaid.
To acquire the site in Celbridge and build 6 houses thereon.
24 months – 12 months minimum
On the sale of houses to an AHB.
The developer was held back due to the COVID lockdown. However, the developer is now back on site and making solid progress. 4 of the 6 foundations are now complete and blockwork has commenced on 2 dwellings. Sub-floor drainage has also been completed. To date, the developer has engaged with Irish Water, ESB and submitted a commencement notice which has been validated. Overall the developer has got the project well organised and progress on site is excellent.
This facility is being provided to acquire a site in the commuter town of Celbridge in North Kildare which has full planning permission for 6 houses. The houses consist of 4 of 3-bed semi-detached properties and 2 of 2-bed semi-detached units.
The borrowers have been in negotiation with Co-operative Housing Ireland and they have now agreed on terms for Co-operative Housing Ireland to purchase the entire development of 6 houses. We have engaged with independent valuers and in their report, they have assessed the gross development value at €2,390,000 inclusive of VAT.
We have received a copy of the Letter of Intent signed by Co-operative Housing Ireland confirming their intention to purchase and the amounts involved. We can confirm the amount is in line with the valuation and there is a reasonable profit margin on the project for the developer which is within normal parameters for this type of project.
The loan consists of 2 separate elements. Loan A will be used to acquire the site and that has 2 elements, the main loan raised through the Property Bridges platform of €420,000 which covers 70% of the site acquisition and an additional Loan B of €841,000 to be drawn as building works proceed.
A further €120,000 is being supplied by a private investor. The debt of the private investor will rank behind both facilities A and B provided by Property Bridges.
We expect this to be drawn in 3 tranches each drawdown happening only once we have received confirmation from our Quantity Surveyor that the expenditure has occurred on the site. The exact quantum of the building works drawdowns are not yet known but they will be subject to two key controls, firstly we will only lend 90% of verified building costs and secondly, we will always maintain an LTV ratio for Loans A and B of less than 70% of the Net Development Value as determined by the Co-operative Housing Ireland agreed purchase terms. Our Quantity Surveyor is preparing a cost analysis report and we do not expect the final cost calculation to vary substantially from the initial estimate.
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.
Eagle Dawn Limited is a group company of Derrin Homes Limited. Derrin Homes’ other group companies are currently building on 3 sites in Co. Kildare (Kildare Town, Allenwood and Derrinturn). On 2 of those sites, the bulk of the units have been pre-sold for social housing. The company has a strong knowledge of the social housing market and strong relationships both with the various Approved Housing Bodies (“AHBs”) and local authorities across the country.
Derrin Homes is managed on a day to day basis by Alan Byrne who is highly experienced in managing the construction of developments of residential properties. We have visited other Derrin Homes sites where construction is well advanced and have been impressed by the quality of the finish.
Derrin as a large multi-site builder is also able to gain economies of scale in both labour and materials and this allows them to keep their costs low. Alan Byrne is particularly strong in this key aspect of building control and costs are constantly reviewed and remedial action is immediately taken should any issues arise. We are confident that Derrin Homes can complete this project on time and within budget.
Security and Security Value
The loan will be secured by a first legal charge over the site to be acquired and the 6 houses that will be constructed.
The site has been valued by our professional valuation firm. They have analysed the site value in the context of what planning obtains, the local market for properties of this type, the demand and demographics of the location, what the agreed buyout of the output is and their estimate of building costs. From this analysis, they have concluded that the site has a value equivalent to the paid purchase price (€600,000).
The valuation of these houses is slightly higher than would be typical in outlying areas of Celbridge which stretches a good distance from the town centre - they reflect the exceptional location of the site, effectively in the town centre. The valuers have conducted a detailed comparison of numerous similar properties in arriving at the valuation.
Our valuer’s research indicates that Celbridge is under-served in the provision of new housing stock and as such demand for centrally located new property is likely to be high.
The location of the subject site is a substantial benefit in this case. The site is within the town of Celbridge and adjacent to all the services and amenities that the town has to offer. Public transport is available on the main road adjacent to the site and shops, post office and all other amenities are within walking distance. This makes the site particularly valuable as a site for social housing a fact that is reflected in the agreement of an Approved Housing Body to purchase the output.
As Loan B is disbursed the security will be enhanced by more than the amount of each subsequent disbursement as we will only lend 90% of the cost on a retrospective basis.
Ultimately the value of the security is underpinned by the agreement from an Approved Housing Body to buy all the units at the prices outlined above. While this agreement is not in the form of a binding contract but rather a Letter of Intent we are familiar with the AHB purchasing process and this format is typical of all such deals. We have not encountered any situation where the Letter of Intent was provided and was ultimately not acted upon. To do so would severely undermine the entire social housing model as it currently exists, and we believe that the risk of this happening is low. In addition, we believe that the exceptional location of the site and the obvious suitability of the scheme for social housing would see another social housing purchaser emerge in the unlikely event of the current purchaser not completing.
Property and Location
The 6 houses will consist of 4 3-bed properties and 2 2-bed properties. All houses will be built to a high specification meeting all the stringent requirements set for social housing. The properties will be completed to a finished standard and handed over to Co-operative Housing Ireland under a turnkey contract. The houses are of generous proportions for their type and will be built to meet all current fire safety and energy efficiency requirements.
Loan and Cost Management
The initial Loan A will be drawn down in the full-on acquisition of the site.
Loan B will be disbursed against costs incurred on the site. Costs will be independently verified by a QS firm (Walsh and Associates, Stillorgan) acting on behalf of the lenders.
We anticipate that Loan B will be divided into 3 disbursements of between €250,000 and €300,000 each. We have an estimated total loan amount of €841,000 for Loan B is 90% of the anticipated building costs however this is subject to change once the QS verifies costs and we will accommodate changes, including cost increases, once our Loan to Net Development Value ratio does not exceed a relatively comfortable 70%.
It is the objective of the borrower to have the properties fully built by the end of 2020 although we have built in a contingency on the loan term to allow for timing slippage. However, we know that Alan Byrne is experienced and successful at driving construction teams to build on time and within budget.
While the facility has a maximum term of 24 months we would expect full repayment sooner than this.
The site has full valid planning permission (Reference 17/1481, An Bord Pleanala Reference Number ABP-302312-18) to construct the 6 houses as envisaged.
We believe this to be a strong loan opportunity for the following reasons;