Offering 8 - Tranche 2 Limerick

Pallaskenry

Offering Description

Tranche 2 of Palaskenry Loan, 14 months, 8.5% Per Annum

Progress on the 16 unit development in Pallaskenry is progressing faster than expected. As such we will be raising a second tranche of finance slightly earlier than planned. 

We are raising €300,000 in the second tranche of finance for this development. This will allow the developers to complete the bulk of the works on the first phase of 8 houses. The loan is repaying 8.5% per annum with an LTV of 69%. The loan is secured by first charge against the development site and works done to date. 

Tranche 2 Overview

  • Interest rate: 8.5% per annum
  • Security: First Charge
  • LTGDV: 69%
  • Term: 14 months 
  • Minimum Term: 6 Months 
  • Final Repayment Date: November 2020
  • Amount: €300,000
  • Exit: Sale of properties

Site Progress

The purchase of the site was completed in early July, with the Builders moving back on site the week commencing the 15th July. Since then they have made significant progress on site, despite the best efforts of the weather.

Foundations and ground floor slabs have now been completed for all of the first phase of eight houses. Six of the houses have their ground floor walls complete, with two houses having their first-floor slab installed and first fix electrical and plumbing finished on the ground floor. The expectation is that the ground floor walls for the final two houses of phase 1 will be in place in the next 2 weeks, weather permitting.

Across the site as a whole site grading and the stone-based roadway is now 75% complete. The Building Control Department from Limerick Council has visited the site and were positive about the works completed to date.

Up until this point, the borrower has not been actively marketing the site, however, this will change in the next 3 weeks, when it is expected that the first two houses will be completed up to and including roof level. At that point, it will be much easier for potential purchasers to appreciate what the development offers.

The latest repayment date for the loan facility is 8th November 2020.

Loan Overview

The Borrower is a construction / development firm in the Limerick area. It has requested that we provide them with a €2.415m site purchase and development facility for a period of 16 months (6 months term certain), secured against the Property, to allow them to purchase the site and construct 16 houses on the property.  The houses will be constructed in two phases of eight houses. We will only provide funding for the second phase if three presales have been agreed from the first phase of houses. Funding will be provided on a staged basis to the Borrower as they reach construction milestones on site.

It is proposed that lenders will receive a return of 8.5% p.a. for this facility. We will take a charge over the entire site.  Our LTGDV (Loan To Gross Development Value) will be 69%, and our LTV (Loan To Value) for the site will be 61%.

The site is located on the main street in Pallaskenry. The village is located just off the N69, which is a direct route into Limerick City Centre, 19km away. The development is within easy walking distance of a number of local amenities, including primary & secondary schools, shops, pubs, post office and local sports clubs. The Borrower, with the forbearance of the current owner of the site has already commenced construction on the site. Foundations for 4 houses have been completed, with the first two houses being at roof level.

The Borrower

Top Drawer Developments is a building company that was set up in 2016, with the aim of building houses in the Limerick area. The principle behind Top Drawer has many years of experience in residential building in the Limerick area. The Borrower has built up a team of reliable subcontractors and advisors which it can call on to allow it to develop sites like the Pallaskenry property. We have completed a legal and tax due diligence which raised no issues.

Security

The loan will be secured by a first legal charge over the Pallaskenry site, supported by a cost overrun guarantee from a Director of Top Drawer Developments. This will ensure, should there be any additional unforeseen costs outside of the original budget, they will be the responsibility of the Borrower, without having any negative impact on the facility.

Property

The Orchard Estate will have 16 houses built over two phases of eight. The Borrower has already commenced work onsite with foundations completed on four houses and walls up to roof level on the first two. The houses will be a mix of 3-bed dormer villas, 3-bed semi-detached and 4-bed semi-detached homes. They will be A-rated with an Air to Water heating system. The houses will be concrete built using a new form of construction called Sup-R-Wall, which meets full regulatory requirements. This form of construction is regarded as superior to the wooden frame method which is now common on most development sites and will be a very attractive feature for potential owners.

The Estate is located in the middle of the main street in Pallaskenry, many local amenities such as shops, post office, creche, primary and secondary schools are on the doorstep of the estate. Pallaskenry itself is a 15-minute drive from the ring road around Limerick and the Raheen Industrial Estate, which is home to a number of multi-nationals such as Regeneron, Stryker and Analog.

Rooney Estate Agents, who are well-regarded property agents in Limerick, have been appointed to market the houses. They have a detailed marketing strategy in place, which will see the development being advertised in the local media, online platforms such as MyHome, and on Linkedin, Twitter and Instagram. The houses will be put on the market at between €240,000 and €270,000, depending on house type. Rooneys have a list of clients who have expressed an interest in this type of housing, who will be contacted informing them of the launch of the development. 

The 16-house development will be completed over two phases of eight houses. Funding for the second phase is dependent on 3 contracted sales for houses in phase one.

Valuation

An independent valuer based in has provided us with a “Red Book” valuation for the site and a view on the achievable sales price for the completed units. They have determined that the open market value for the site is €435,000, which matches the cost price. 

With regards the sales prices that are being guided for the completed units, the valuers have commented as follows “Having reviewed the build specification for the subject development we would be of the opinion that the pricing for the development is ranged at an achievable price should it be brought to the open market”

In reaching this opinion the valuer used evidence of new house sales in Mungret, which is the nearest suburb in Limerick to Pallaskenry, where prices for 3-bed semi-detached houses are starting at €285,000. With the Pallaskenry development having a better build quality. Similar houses in Castletroy / Annacoty area have starting prices at €285,000 for 3-bed semi-detached and €360,000 for four-bed semi-detached houses.            

The total sales value of the development net of VAT is €3.5m, based on the sale guide prices for the individual units. This value has been supported by our independent valuers report. Based on this figure the LTGDV is 69% (€2.415m/€3.5m). 

€305,000.00

Raised Of €305,000.00 Goal

Days 0
Hours 0
Mins 0
Investment complete
 
Debt Offer. Structure
8.5% Ann. return
14 Months Term

Call 0870646791