Loan Note Investments

Spot on Red Onion. Ballisk Homes is the exact type of loan note I would be thinking about. Dublin property investment, severe shortage of property and should work out ok over the next 3 years or so. That's closed now though. Spot on 're the article too. I would consider the author a shrewd man. Mr Earl yes I am thinking strongly about some monies to companies you mention but USA would not be on my list. To Gordon, yes thanks I will look into European Reid's.
 
Daddy Ireland said:
That's closed now though.
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Not just closed. They've since repaid it, because they refinanced it cheaper elsewhere after 12 months.
Not a bad return, but I don't think you'll find a lot like this. Check out how the fee structure works on these also if you're looking into them.
 
What is the simplest way to invest in European REIT's. I don't find ETF's of much interest as the tax thing is a bit complicated. What have been returns from such in last 5 years.
 
Wow, I didn't know that it was repaid early. I must look into that to see if anything on top of 9% was paid for early redemption. Fee to broker was 2% up front.
 
Protection built into Ballisk Loan note meant investors received 13.87% after 13 months for early redemption. Now I would have liked a bit of that. Buyer beware and all that but there are some good loan notes floating around too.
 
Daddy Ireland said:
Spot on 're the article too. I would consider the author a shrewd man.
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And I would consider him anything but! He is advocating exactly the kind of strategy that saw Irish investors loose more than most other Europeans! The loan notes are basically concentrated subprime lending and the property syndicates are so small that they normally would be referred to as penny stock type investments. And of course to say nothing of the fact that property is one of the most risky asset classes you can invest in!

Of the portfolios I worked on I say you can expect to earn a return of about 4% - 6% at a reasonable risk. Beyond that one risks taking a serious hit on one’s retirement capital.
 
Although I posted previously that if the project fails you are likely to be wiped out, an investment in property in Ireland right now hardly seems doomed to failure.

You talk about equal security with the bank and a first charge. What does this mean, my understanding is that any charge on an asset has to rank either before or after any other charge. Why would the bank accept a situation where the loan notes ranked before, (or equal to if that is possible) the banks charge.
 
All I know Cremeegg on that point is that there is a first charge put on the property that is being funded. So I assume if a bank is putting up 70% and say the balance is 30% funded by a loan note without delving further I cannot answer for sure but I reckon the bank and loan note providers have equal ranking. It is a question though that I can check should I be interested in another venture that comes up. I would only be interested in loan note issuance that is Dublin property based.
 
If we take the example of Ballisk, there was no bank debt. The only other funds were equity in the company, so the senior note had first legal charge over the property assets.
This is a bit unusual. You usually see bank debt, and the junior loan notes being sold to investors, so they rank behind bank debt.

Note: there are times that banks (usually via SPVs) will invest in the junior notes (mezzanine finance) so you'd have equal ranking in that case as you've all bought the same note.
 
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So Red Onion would that have made Ballisk a sound investment in the current property environment and if so should a similar scheme be offered what would you think.
 
The project goes well; I get 9%.

The project goes badly; guess what, we’re partners in a development project.

I think I’d prefer to just partner on the development as I’m not a big fan of limited upside/unlimited downside.
 
Of course Gordon, but unless you have a large sum to invest in a single project that’s not possible.

To be able to participate in a project like this for €25k, with no recourse to you, is not necessarily a bad plan.
 
cremeegg said:
Of course Gordon, but unless you have a large sum to invest in a single project that’s not possible.

To be able to participate in a project like this for €25k, with no recourse to you, is not necessarily a bad plan.
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I think Mr Earl’s advice is rock solid. This sort of stuff is not for widows and orphans, and I’d include someone whose retirement pot amounts to €250k in that bracket. Caveat emptor x 100.
 
I would be committing up to 10% of cash pot only ie a max 25k to such a venture.
In hindsight Ballisk clearly was a good deal but it looks like it was a reasonable risk if it was a presented loan issuance opportunity today. As I said the investment house do not want to sell duds as too bad for business and effects any future loan issuabces they may offer. If such a venture very similar to Ballisk is presented in the coming months I will look at it bearing in mind all the points raised. It at least warrants an interest and if a lot of things are in place is worth an investment I believe.
 
Daddy Ireland said:
As I said the investment house do not want to sell duds as too bad for business and effects any future loan issuabces they may offer.
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Except the evidence is exactly the opposite! Read the Swiss government reports on the securitisation process at UBS note the order - keep the best, then next favoured investors and dump the rest on the public. Or read up on the cases taken by Elliot Spicer when he was AG in NY. Or simply google Canter Fitzgerald, Fines and Penalties, to see how much they care about the public.

The idea that they will not sell you duds because they are nice guys does not match the history of these investment houses.
 
Hi Daddy Ireland

Did you invest?

A salutary lesson here:

Dolphin Trust collapse - Wealth Options broker

I'm one of the 1,800 Irish suckers who took the German Property Group (formerly called Dolphin Trust) bait. :confused: Although initially hesitant about investing, I was convinced when my broker sent me the following assurance from Wealth Option Trustees (WOT):- "We hold first...
askaboutmoney.com
 
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