Property syndicate loan with IBRC

[PE2013]

New poster here. I invested in a few third party property investment syndicates using IBRC equity loans. Seemed like a good idea at the time as I was considered a reasonably high earning professional with an ability to repay and I had a relatively small mortgage so didn't appear to be over indebted. Obviously should have stuck to what I was good at and not property!!

I've only ever made interest only payments and in recent times have been paying down a little capital if and when cash is available. The return on the investments will be up to 20% of the borrowings and it will take a few years for a return to come through. It will take me fifteen years to pay back the capital, based on current repayments.

With IBRC now in liquidation and discussions about the sale of loan books, how do you think they will treat these equity loans? Will I have the opportunity to buy the loan and at what price? I don't have the funds personally but friends and family might be interested if it reduced my debt burden and I would pay them back.

 

[Brendan Burgess]

HI PE

Another interesting question on IBRC.

What do you mean by an "equity loan"?

Did the syndicate buy a property in its own name? This is important - is it clear that the property is owned by the syndicate and not by Anglo?
What are the terms of your loan? Is it interest-only for a fixed period? What happens at the end of the period?
Is it non-recourse? In other words, it could be secured on the property without recourse to the borrowers if the property is not worth the balance on the loans?
Do you know the other syndicate members? It's always a good idea to take joint action on these issues.

I presume that IBRC will attempt to sell the loan on. It might be worth offering them a settlement now as it is likely to be more than they would get from a vulture fund.

 

[PE2013]

Syndicate bought property with non-recourse debt mortgaged on the property. Equity provided by investors. I just happened to borrow my equity from IBRC and its secured on my shares in the SPV that owns the property. The syndicates would range in size from 20 to 50 investors. My own loan is very watery (as they were) and its an on demand facility now as it expired a few years back. So presumably its a personal loan and they could pursue me for non-payment.

How does a vulture fund value something like this? Just on the value of the underlying security or the Borrowers ability to repay over a 15 year period?

 

[Brendan Burgess]

Hi PE

I understand it now. I would think that they would value your loan very low indeed. Is the security worth very much? You are in arrears which makes it worse.

Do you have contact with IBRC? Do they chase you for repayments? Ask them if there is a deal going. I think you will be told that there isn't, but it's worth asking.

brendan

 

[mercman]

How does a vulture fund value something like this?

Vulture funds act in the manner as they sound, Cheap as they can get it. I must only presume that the loan is fixed for a long period ?? If it was fixed by Anglo in the UK, there is an inquiry, by the FSA, into these loans been fixed and the lack of knowledge of Investors had about these.

If it was banked in Ireland, you will have ti wait until the liquidator is up and ready to deal with these affairs.

I'm involved with a number of these funds which are fraught with problems and difficulties. In fact I'm in one similar to the one you state.

BTW, Welcome to AAM !

 

[PE2013]

I would think that they would value your loan very low indeed. Is the security worth very much? You are in arrears which makes it worse.

Do they chase you for repayments? Ask them if there is a deal going. I think you will be told that there isn't, but it's worth asking.

The security will probably return 20% of the borrowings in a piecemeal fashion over a few years as the properties are sold. There is still some equity in them, just not much. I'm paying all interest and a bit of capital so not in arrears per se but its a demand loan so technically in default as I can't repay if requested. As I am making an effort to repay capital I think they have bigger problems than me. I very much doubt they will do a deal, but the liquidator might do if I'm willing to pay more than the "valuation" of my loans. Just don't know what that valuation would be or where to start. Will give it a few months for the dust to settle first.