Project – Redevelopment of commercial property into new 24 bed student accommodation for lease.
Team– The Project has been assessed and planned by an UpSPACE led and assembled design team of vetted UpSPACE collaborators. The delivery of the project will be project managed by UpSPACE through to completion.
Client – The client Kerrie in this instance is the current owner and landlord of an existing commercial building which had come to the end of its shelf life with the majority of the building becoming vacant. Kerrie is a professional athlete and has no experience of Property Development. Kerrie was introduced to UpSPACE by her Financial Advisor.
|Property||Kilcock Road, Maynooth (the “Property”)|
|Security||A first collateral charge over the property listed above. A first charge over the shares in the borrower company. An SPV will be formed to manage this development loan.|
|Total Asset Value||€1,650,000|
|Interest||8% per annum|
|LTV (Loan To Value)||50%|
|Term||18 months (12 months minimum)|
|Repayment||Refinance of the Property|
This is a development loan into an SPV specifically set up for the development of this project. The company is a newly created development SPV managed and run by UpSPACE on behalf of the owner. UpSPACE have assembled and headed and experienced team. UpSPACE will project manage the development using UpSPACE accredited collaborators who are all experienced design and construction teams in similar projects.
The Property consists of an existing commercial site (the “Property”). The Borrower has sought to obtain planning permission to demolish the existing commercial unit and construct 4 x 6 bed student residential apartment units, total beds 24. The purpose of this loan is to allow the Borrower/SPV to finance the construction of the student accommodation development. The planning application has been lodged and should take approximately 2 to 4 months. Upon securing the planning permission, the SPV will seek the finance in order to develop the student accommodation.
The estimated valuation of the Developed Residential Property is €1,650,000 and is in excess of the loan amount sought.
The Developed Residential Property has been valued by qualified valuer in the Feb 2020 and the development loan sought is for €825,000 or 50% of the valuation. This finance is only for construction costs and there is no finance on the site.
The proposed loan has a maximum term of 18 months and a minimum interest period of 12 months. This means that lenders will receive at least 12 months’ worth of interest payment even if the Property sells and the loan is repaid before the expiry of the 12 month term.
The loan carries an interest rate of 0.66% per month which is the equivalent of 8% per annum.
The loan is secured by a charge over the Site and Developed Student Residential Property and by a charge over the shares in the Borrower company. This effectively gives the lenders the right to sell the Property if the loan is not repaid at the end of the loan period.
UpSPACE have 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.
The Borrower is the owner of the site and a new company/SPV has been created to develop the project. UpSPACE will be project managed the development team.
The team development team assembled is as follows;
We will seek its incorporation documents as part of our legal due diligence and our security will include a charge over the shares of the company allowing us control in the event of default.
As there is no prior trading there is no trading, profit and loss or financial position to consider.
The principal security for this loan is a charge over the site and Development Residential Property and by a charge over the shares in the Borrower company.
Proposed Development Schedule
The Proposed Student Residential Development will compromise the following;
|Floor||Unit||Description||Expected Rental P/A|
|Ground||1||6 bed. Apartment||€28,800|
|2||6 bed. Apartment||€28,800|
|First||3||6 bed. Apartment||€28,800|
|4||6 bed. Apartment||€28,800|
The property has been valued at €1,650,000 on a generous annual yield of 7.0%, based upon the expected rental returns.
The Property is situated on the edge of Maynnoth Town and is within a 5 minute walk of the Maynooth University Campus. The property is easily accessed via the nearby M4 motorway, and is a 20 minute drive from the M50, and a 35 minutes drive from Dublin City Centre and 35 minutes drive to Dublin Airport. It is within easy reach of the neighbouring towns of Leixlip, Lucan and Kilcock and the major Student Campus of Maynooth University. It is located along the well serviced Bus Eireann route 115 to Dublin.
Planning has been sought in September 2019 and will be examined as part of our normal legal due diligence but the Residential Property is currently used for residential purposes – and we do not expect to encounter any issues around planning.
Term and Exit
It is proposed to have a term of 18 months on this facility.
We do not expect that the refinance and subsequent closing period will take 18 months but have allowed this term to cover any eventualities.
There is a built-in 12-month minimum term therefore even if the property were to sell immediately and close within a normal 1 to 2-month timeframe all lenders will earn a minimum of 8% on their short-term investment.
In regards to the exit, the Borrower seeks to refinance the facility loan once the development has been complete and let with students. The purpose of this loan is to allow the SPV to finance the development of the project. Upon securing the planning permission, the SPV will seek the finance in order to develop the student accommodation.
The Developed Property is valued at €1,650,000 by a qualified valuer in the February 2020 and the development loan sought is for €825,000 or 50% of the valuation.
This is a development facility secured against a property. The following factors make this a strong investment;
– The investment is for 18 months but has a minimum term of 12 months guaranteeing a minimum return of 8%.
– The property is in an area that in demand from locals and also has great connectivity and is close to both the M1 & M50 Motorways for those working in Dublin.
– UpSPACE has assembled a development team headed by a project manager with extensive experience working with UpSPACE collaborators on the design and construction teams who have all myriad experience on similar projects.
– Our loan-to-value (LTV) rate of only 50% provides significant comfort even in the event the Property did not achieve its full yield value of €1,700,000.
– Strong security where should the Borrower fail to secure the planning permission the loan facility will not be made available.
Please refer to the Facility Agreement for a full disclosure of terms.