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Macro Location Analysis
EvoEstate Risk rating is of an informative nature only & can not be considered investment advice.
Loan To value
Purpose of the loan
Financing a purchase/resale property dealer operation near Geneva.
The operators acquire a house at 170 Route de la Grotte, in Jonzier-Epagny (74), in direct proximity to the Swiss border.
They will resell the property after completing some interior renovation work. The operators have also obtained a building permit to develop 650 m² at the bottom of the plot. The permit authorizes the construction of two semi-detached houses of 144 m² of living space each (with garage).
The operation is carried out by Mrs. MAYER, main shareholder and operator of the company EROS, and Mr. FERNANDES, her companion. Mrs. MAYER has been an interior designer for 8 years, and Mr. FERNANDES has been in the construction business for more than 18 years and has been the head of his company for 11 years. They wished to put their skills to good use and launch themselves into the real estate business, particularly through property dealer operations. A first operation has been successfully completed, and three others are in progress. Until now, the operators have only used their own funds to carry out their projects, and are now turning to crowdfunding to develop their activity.
*The house has a living area of 168 m², for 290 m² of floor space. The 60 m² of fitted out surfaces which do not enter the criteria of the livable surfaces (water room which must be created, fitted out attic...) were weighted at 60 %.
**Corresponds to two houses of 161 m² of floor space.
The existing villa is composed of 6 rooms, including 4 bedrooms, a living room, a kitchen. It also includes a large mezzanine, a kitchen, a bathroom and a shower room. The operators wish to update the kitchen, add a shower room and convert part of the attic. The house also has a large garage and a full basement including a boiler room and 3 healthy rooms currently used as laundry and storage. 900 m² of exterior is present all around the house, including a part on the front in chalk. The garden is only located on the back and sides of the house.
The existing house will be commercialised as soon as the work is completed.
The plots of land which are the subject of a building permit obtained and purged of all appeals must be resold to a real estate operator. A promise must be signed as soon as the deed is reiterated. It should be noted that the entire construction project is budgeted. The cost price, excluding land, would be around €350,000 including tax for the construction of a house with 144 m² of living space and 161 m² of floor space. Each house also has 130 m² of garden and a garage.
The operators do not carry out the works, but resell the land with the building permit to an operator. Only one expression of interest has been made to date. No contract has yet been signed, as the operators are waiting to own the land before taking further steps. This reservation was therefore not taken into account in the audit.
Each new house would be resold, including the land, at €580,000, i.e. a selling price of €4,028 per square meter, which is coherent given the market and the new nature of the properties. Note that these selling prices take into account a margin for the final operator of about 15%.
The existing house is currently in very good condition both inside and out. The operators are carrying out some minor embellishment and refurbishment work, including updating the kitchen and adding a shower room adjoining a bedroom in the attic.
Building permit projection (work not done by operators):
Real estate market price
The house is being sold at a slightly below market price as a precaution. The house does not have a large plot of land in a country setting, which partly explains this price. The operators preferred to remain cautious on the selling price, even if it means re-evaluating the property depending on the market's response to the product. Also, this allows operators to consider a quick resale.
The property is located in the commune of Jonzier-Epagny, 30 minutes (23 km) from downtown Geneva and 10 minutes from the Franco-Swiss border. It is a small commune of 820 inhabitants, few shops exist in the vicinity, but the town benefits from the infrastructures of Geneva in direct proximity. The privileged location of the commune with the Swiss border, while offering the quality of life of the countryside, is sought after by border workers.
SAS EROS carried out the operation, with a capital of 1,000 euros, registered in the Thonon-les-Bains Trade and Companies Register under number 853 576 700, on 04/09/2019.
SAS EROS, which is carrying out the Jonzier-Epagny operation, is 98.8% owned by Mrs. Tanaïs MAYER, 1% by Mr. Michael FERNANDES and 0.2% by Mr. and Mrs. MICHAUD, Mrs. MAYER's parents.
In order to comply with the regulatory provisions concerning bond issues, SAS EROS will be subject to an asset/liability verification of the structure.
The bond will be issued by SAS EROS at an annual rate of 9% per annum for a term of 18 months. The bond will be amortized and repaid as the operator sells, with interest paid annually but guaranteed for a minimum period of 5 months.
In order to provide additional guarantees, the repayment of the bond is secured by:
* A first ranking mortgage in favour of Raizers representing the bondholders' mass
* Personal guarantees of Mrs. MAYER, Mr. FERNANDES, Mr. MICHAUD and Mrs. MICHAUD.
The bond contract provides for an early repayment if :
* Resale of the operation
* Loan to Value (Loan / Turnover: 42 %
* Loan to Cost (Loan/ Cost of Ownership): 51 %
* Loan to Acquisition (Loan/ Acquisition cost): 57 %
EROS SAS is owned by Ms. Tanaïs MAYER (98.8%) and Mr. Michael FERNANDES (1%).
Ms. MAYER, after having worked as an Assistant Project Manager (AMO) in Mr. FERNANDES' company, has been involved in interior design since 2013.
Mr. FERNANDES, a tiler by training, created his company specialized in the installation of floor and wall coverings (tiles, earthenware, paint...) and the pouring of slabs more than 10 years ago. They have recently decided to use their know-how in the building and real estate business to carry out real estate operations in the area.
To support them financially, Mrs. Mayer's parents, Mr. and Mrs. Michaud, are shareholders with 0.1% each and contribute funds on an associate current account for the operations.
Balance sheet of EROS SAS
Income statement of EROS SAS