Taunton Iron Cider wrote: June 21st, 2022, 6:36 am

jonescmj1 wrote: June 21st, 2022, 4:21 am Assuming to purchase Rodney Parade, does anyone know the max approx. funds the RFU would require, the minimum deposit required, max mortgage period allowable for such an asset?


Colin

From my experience, for a commercial mortgage a main stream lender would work to an LTV (loan to value) of 60% or 70%. As for term, then you are typically looking at a max of 10 to 15 years. As with anything there are always exceptions to the rule, but the perceived increased risk is reflected in the pricing.
Regarding the WRU, only they could quantify what price would be accepted, and of course they would need to be a willing seller. To have a stab at a valuation, I would suggest that as a sports stadium there are probably only three potential purchasers, County, Dragons and the Council, and possibly a combination of all three. Therefore the value is what they would be prepared to pay, say £3/£4m.

So to expand on that, a purchase price of £4m would conservatively qualify for a loan of £2.8m which over 15 years on an amortising basis and at a rate of say 7%, would equate to approx £25,000 per month, or £300,000pa. In addition, there would be an arrangement fee to be paid at the outset, so basically the buyer would need about £1.5m to start the process off. All this illustrates the need to involve the Council, both as lender and partner.

However if the Council were daft enough to consider the site for housing, then of course the position changes. Doesn’t the whole site extend to around 9 acres? If so, then I guess the value for residential development could be £5/£6m, but the economic loss to the City considerably more!

pembsexile wrote: June 21st, 2022, 8:43 am

Taunton Iron Cider wrote: June 21st, 2022, 6:36 am

jonescmj1 wrote: June 21st, 2022, 4:21 am Assuming to purchase Rodney Parade, does anyone know the max approx. funds the RFU would require, the minimum deposit required, max mortgage period allowable for such an asset?


Colin

From my experience, for a commercial mortgage a main stream lender would work to an LTV (loan to value) of 60% or 70%. As for term, then you are typically looking at a max of 10 to 15 years. As with anything there are always exceptions to the rule, but the perceived increased risk is reflected in the pricing.
Regarding the WRU, only they could quantify what price would be accepted, and of course they would need to be a willing seller. To have a stab at a valuation, I would suggest that as a sports stadium there are probably only three potential purchasers, County, Dragons and the Council, and possibly a combination of all three. Therefore the value is what they would be prepared to pay, say £3/£4m.

So to expand on that, a purchase price of £4m would conservatively qualify for a loan of £2.8m which over 15 years on an amortising basis and at a rate of say 7%, would equate to approx £25,000 per month, or £300,000pa. In addition, there would be an arrangement fee to be paid at the outset, so basically the buyer would need about £1.5m to start the process off. All this illustrates the need to involve the Council, both as lender and partner.

However if the Council were daft enough to consider the site for housing, then of course the position changes. Doesn’t the whole site extend to around 9 acres? If so, then I guess the value for residential development could be £5/£6m, but the economic loss to the City considerably more!

I am not a financial expert by any means but surely that valuation is low? When the Bisley was being built I am sure that I saw an article saying that it would cost many millions. Surely that has to be factored in? Happy to be proved wrong on that though.

Taunton Iron Cider wrote: June 21st, 2022, 6:36 am

jonescmj1 wrote: June 21st, 2022, 4:21 am Assuming to purchase Rodney Parade, does anyone know the max approx. funds the RFU would require, the minimum deposit required, max mortgage period allowable for such an asset?


Colin

From my experience, for a commercial mortgage a main stream lender would work to an LTV (loan to value) of 60% or 70%. As for term, then you are typically looking at a max of 10 to 15 years. As with anything there are always exceptions to the rule, but the perceived increased risk is reflected in the pricing.
Regarding the WRU, only they could quantify what price would be accepted, and of course they would need to be a willing seller. To have a stab at a valuation, I would suggest that as a sports stadium there are probably only three potential purchasers, County, Dragons and the Council, and possibly a combination of all three. Therefore the value is what they would be prepared to pay, say £3/£4m.

So to expand on that, a purchase price of £4m would conservatively qualify for a loan of £2.8m which over 15 years on an amortising basis and at a rate of say 7%, would equate to approx £25,000 per month, or £300,000pa. In addition, there would be an arrangement fee to be paid at the outset, so basically the buyer would need about £1.5m to start the process off. All this illustrates the need to involve the Council, both as lender and partner.

However if the Council were daft enough to consider the site for housing, then of course the position changes. Doesn’t the whole site extend to around 9 acres? If so, then I guess the value for residential development could be £5/£6m, but the economic loss to the City considerably more!