This launch is the 2nd phase of a 4 phased raise on the Loan Agreement between CrowdProperty and the borrower where we are raising £400,000 having previously raised £700,000 towards a facility agreement of £1,800,000. The total number of raises is expected to be 4.
The agreed loan term is 18 months (max) from 8th January 2019 so the Phase 2 loan will be for approx. 13 months. Each raise will merge into the existing legal agreement and as with all our loans 1st charge security registered with the Land Registry is confirmed. Lenders to this phase will receive interest at 8% per annum over the remaining period of the loan or when the loan is repaid in full or part.
The day 1 release from the Phase 1 raise was £615,000 representing an Initial LTV of 67.4%, The LTV will fall to 59.8% (including rolled up interest) once works have been completed. Phase 2 monies will be utilised to continue the conversion works and be released on the verification of our Independent Monitoring Surveyors inspections.
The borrowers, KHP Group of Companies having completed purchase of the property with monies from the phase 1 raise have embarked on the conversion works and to date completed the following:-
1) Asbestos removal work
2) Part of the internal strip out work
3) Structural investigation exploratory work
4) Forming new openings in existing masonry
Works planned in the forthcoming months include:
1) Completion of strip out including minor demolition works
2) Phase 1 completion of structural alterations
3) Commencement of fitting new ceilings and partitions
4) Commencement of building services 1st fix
The practical completion of works as signed in the JCT contract is agreed as 7th February 2020 with parts of the building to be completed in phases from as early as 9 August 2019.
ABOUT THE PROJECT
The property is a part 2 part 3 storey former Care Home (St Lawrence Care Home) dating back to the 1970’s. The property is located approx. 4 mins (0.8 miles) north west of Crediton town centre. Crediton is located 9 miles west of Exeter in Devon with a population of 8,077 and a direct workforce of approx. 4,802. Planning (18/00091/FUL) was granted for the conversion of the property to provide 22 residential flats and 37 car spaces. The borrower spent £104,000 to secure planning and completed the purchase of the property in early January 2019. The Borrower, KHP Group of Companies is well known to CrowdProperty and currently has 3 projects in play, having previously repaid on another one in 2017.
The RICS valuation of the property in its existing condition with the benefit of planning was £912,500. The RICS estimate of the completed development (GDV) is £3,277,500. CrowdProperty agreed to lend the borrower £1,800,000 over a period of 18 months in 4 separate raises. The initial raise was £700,000.
LOCATION AND DESCRIPTION
Crediton is situated in Mid Devon about 9 miles North West of Exeter. Access to the M5, J30 + 31 at Exeter is via A377. The town is situated in the Vale of Creedy and is home to the Creedy Lakes. The town benefits from a railway station approx. 1 mile from the property with regular trains into Exeter where direct connections to Bristol and London can be boarded. With a population of 8,022 Crediton serves as a commuter suburb to Exeter.
The property is situated just North West of the town centre within a predominantly residential area and opposite Crediton Police Station. The property is a mix of single, 2 and 3 storey attached buildings constructed of cavity brick and blockwork elevations under pitched roofs overlain with interlocking concrete tiles.
Local amenities include:
Shobrooke Park 1.6 miles
Lords Meadow Leisure Centre 1.2 miles
Crediton hospital 0.4 miles
Queen Elizabeth School 0.2 miles
SITE AREA/FLOOR AREA
Total site area: 0.98 acres
Total GIA floor area: 17, 728 sq ft (1,647 sq m)
A total of 22 residential units providing 7 x 1 bedroom flats, 14 x 2 bedroom flats and 1 x 3 bedroom flat as follows:
Ground Floor 5,823 sq ft (541 sq m) apartments 1 - 9
First Floor 5,984 sq ft (556 sq m) apartments 10 - 18
Second Floor 476 sq ft (44.37 sq m) apartments 19 - 22
OVERVIEW OF FINANCIALS
CrowdProperty has a loan facility agreement in place up to a maximum of £1,800,000 over a 4 phased raise as follows:-
First phase raise was £700,000, from which an initial £615,000 was released towards the purchase of the property. The RICS valuation with the benefit of planning was stated as £912,500 representing an initial LTV of 67.4%. The remainder of the phase 1 raise was released on the Independent Monitoring Surveyors (IMS) verification that initial works had been executed. The phase 2 raise of £400,000 is to fund further conversion works and will also be released in phases subject to our IMS reports. Phase 3 and 4 raises will also be utilised to fund the conversion works.
The estimated cost of works is £1,207,027 as agreed by the QS and set out in the JCT contract.
The gross development value once works have been completed is £3,227,500 (RICS verified) and including rolled up interest and assuming full term will give a LTV of 59.8%.
This phase will be for term of circa 13 months. Given the nature of this opportunity it is expected partial repayment of the loan will occur when units have been refurbished and sold/re financed. The borrowers exit strategy is to part sell and part let, refinance and hold to pay back CrowdProperty.
This phase of the loan is targeted to commence on or around 7th June 2019 and once we have been able to collect all the lenders money. As with all our loans CrowdProperty has a first legal charge as documented at the Land Registry.
Sell part and let and refinance part
min. loan (6 months)
13 month loan
Having now completed purchase of St Lawrence Care Home in January 2019 and with the JCT contract in place, KHP Investments have commenced works on the conversion of this former care home. From the start they have communicated with us on progress. The Directors are experienced in every aspect of the development process including architect, engineers and construction management and have a proven pay back track record with CrowdProperty.
Our in-house property experts thoroughly assess each project proposal. We scrutinise the developer and any of their partners’ track records. Only the most promising projects, by the most experienced developers, will receive an informal offer. CrowdProperty will only work up to certain loan-to-value and loan-to-cost percentages, and each project must meet our 25% profit-on-cost criteria. For more information please view our risk statement.
A ‘1st legal charge’ gives CrowdProperty the legal right to take ownership of a property in the unlikely event that a property professional defaults on their loan repayments. 1st legal change is the highest level of security and gives CrowdProperty all the rights that a mortgage company holds. We have 1st legal charge on every project listed on our platform. This is an essential, non-negotiable criterion to ensure your funds are safe.
Our in-house experts perform strict and rigorous checks on all projects proposed. With almost 100 years’ experience in the industry, we work in partnership with our borrowers. We work in partnership with our borrowers until project completion. If a borrower were to default, CrowdProperty’s 1st legal charge allows us to take ownership of the project. Here we would utilise industry experience to ensure the most suitable exit strategy was followed.