Peer to Peer Loans in Europe
- May 13, 2016
- 4 min read
Investment Summary
Invest in a loan for an under development complex of four, 4 bedroom luxury Villas. City Park is built on a purely residential area with specifications of the highest quality, it offers luxury housing in a beautiful, safe and family-orientated environment, with landscaped public green area for children’s safe play and relaxation.
The developer is requesting a loan of €600,000 in order to complete the underlying properties. The land was purchased for a total of €600,000 in March of 2016. The borrower plans to sell the properties.
Purchase Price: €600,000
Development Cost: €800,000
Completed project Value: €2,000,000
An independent third party appraisal commissioned by C4F, shows a Completed project Value of €2,000,000. The LTV ratio is 30% and is in line with the data we found during our due diligence process. Our research shows the housing market surrounding the underlying property in this area is stable and supply and demand are in balance.
Financial Overview
24 month hold term at 10% P.A, net of C4F's administrative costs
Underlying loan secured by first position lien on title and personal guarantee of the developer.
30% LTV
The developer is contributing €800,000 in a combination of property purchase and development costs. C4F is contributing a €600,000 loan for development costs for a total capitalization of €2,000,000.
The Crowd-lending Process
Crowd lending or Peer to Peer (P2P) Loans, is the process of multiple investors coming together to finance a project. Investors receive their returns through interest payments. When you commit funds to this project, money will be sent to the client account but no money will actually leave the client account until the crowd-lending target is reached. If the crowd lending target is not reached, your funds will be returned. Your investment on the platform is made via the purchase of shares in a Special purpose vehicle (SPV), which is a Company, established specifically for financing that individual project. There is a different SPV for every project; therefore you will always know that you are investing in a specific project chosen by you. At the point of investment you will be required to enter a set of investment documents. These are standard form for each investment and sample documents can be accessed before you decide to invest. We encourage you to seek independent legal advice if you require assistance
Income
Interest will begin to accrue at the date each investors funds clear escrow. Distributions of interest only will be paid as loan payments from the Borrower are processed. Borrower will pay interest only payments to the SPV which will in turn be distributed to you as an investor quarterly at your fractional investment amount. Total repayment of capital is expected on or before the end of April 2018. Distributions will be made directly into each investors account.
Property Overview
City Park is an oasis of serenity and greenery situated just a few kilometers from the centre of Nicosia in a Desirable Upscale Neighborhood. Built on a purely residential area with specifications of the highest quality, it offers luxury housing in a beautiful, safe and family-orientated environment, with landscaped public green area for children’s safe play and relaxation.
The Residences have unique architecture designed by contemporary and experienced architects and have varying size and aesthetic design to cater for diverse tastes. Each Villa consists of a ground floor with open plan living room and kitchen, toilet, balconies, covered parking and a pool. The first floor consists of four bedrooms and four bathrooms with toilet. They feature under floor heating and air conditioning throughout, and granite floors and kitchen surfaces. Swimming pools are heated, with synthetic decking perimeter, shower room and a jacuzzi. A poolside bar and grill area is complemented by gardens finished with artificial grass and ornamental plants.
Borrower
The borrowing entity is led by a team of real estate professionals with over 25 years of experience. The team is comprised of finance, management, design, construction and marketing experts. They focus on upscale housing and residential markets in Nicosia, Cyprus and invest in projects that have substantial value-add opportunities, allowing them to maximize their returns.
Risk Profile
Monitoring the risk factors in your portfolio is an important part of the due diligence process. As such, C4F has created a proprietary risk profile for your review. In keeping with our policy of absolute transparency, we're showing you the same risks, mitigants, and high level risk factors that play into our decision-making process.
Risk: Low
Borrower Contribution: 70%
Borrower Track Record : Successful Development & Sale of Multiple Properties
Local Market: Stable
Risks Mitigants: The borrower does not complete the project.
The borrower is contributing €800,000 (70%) and the loan is funded at only 30% LTV. This allows for a reasonable expectation of recovery of capital in a liquidation scenario.
Market Description
It is evident from the improved fiscal indicators that the Cyprus economy is slowly entering a path of recovery. For the real estate market the significant increase of 25,8% in sales deeds during 2015 is a strong sign that the market may be starting to recover.
The local demand is very strong due to the culture of Cypriots who consider owning their own home as an absolute must and will do their best to achieve it once they get married. The parents also help to a great extend saving money all their life to help their kids buy a house. Home ownership in Cyprus is one of the highest in Europe at more than 80%. Foreign buyers also started to come back due to the improving economy, lower prices and generous incentives offered by the government. We have the traditional foreign buyers who choose Cyprus for its beaches, friendly culture and ever-shining sun. The last few years we also have buyers from China, Russia, Ukraine and Middle East buying properties for investment and/or to obtain Cyprus (EU) Citizenship & Permanent Residence.
Comments