Finalised Thoughts on the JLs 9.1.2012 Progress Report
Hi Folks,
Now posting my finalised thoughts on the JLs 9.1.2012 Progress Report. I think it consists of a lot of good news for us.
Anyway my thoughts are on as an attachment to retain the format.
Will start updating my Table 12 to take account of the data within the Progress Report and post it in due course.
My apologies in starting a new thread with this Report. I do not know how to add it to the existing one and add the attachment,
Take Care,
Gordon 45
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| 2012.2.18 - finalised thoughts on the JLS 6 monthly report of 9.1.2012.doc | 37.5 KB |
(11 votes)
@Gordon - Finalised thoughts...
Very good precis Gordon; I'm particularly interested in the JLs latest estimate on returns from the Loan Book which you cleverly deduced as a low of 89.08% and a high of 91.82%. The average value of your deductions is 90.45% which of the original sum of £416m leaves £376.3m thereby anticipating a loss of £39.7m. The value of loans currently outstanding is £82.05m so subtracting the average loss of £39.7m leaves just £42.35m to come back to the pot from this source. Perhaps Brabander is right, we should now turn our attention to where the greater sum of monies is expected (hoped for) -- KSF UK.
Ice
Predicted Loan Book Return Too Low ?
I am puzzled at the predicted low level of return from the remaining loan book - only 42.35 million out of the currently outstanding 82.05 million.
The JL's report that the total value of the UK property loans still outstanding is 27.56 million and given that the UK property has held up reasonably well then can we not be reasonably sure to cover 100% of the monies due on these loans, particularly if the mortgage amounts have been kept to 60% of the value of the properties ( this percentage was mentioned in previous postings ). On this basis the balance of the outstanding loans is 54.59 million ( 82.05 - 27.56 ). However, if the 27.56 million is deducted from the 42.35 million to come back to the pot then only 14.79 million will come back from the 54.59 million ie only 27%. This appears a very low percentage unless the resale value of the property against which these loans are secured is very poor and the borrowers have no other assets to be drawn on to top up any shortfall. Hopefully an unduly pessimistic outcome.
@D RAM: Returns...
Hi D RAM,
How do the JLs guestimate anything to 2 decimal points and then change it by 4%? It's all so speculative; my simple sums analysis above is a little tongue-in-cheek just to highlight this point. On the serious side, just over half of the money is in property -- and not all of it in the UK, let alone London. There are other, more dodgy assets (26% is in yachts for goodness sake!) Then we have the Spanish property which is expected to realise 3/8 of FA... I've said it before, property is only worth what someone is willing to pay for it and I don't believe in 100% until its in the bag.
Both Gordon and I have warned long enough that the flow of funds coming from future years is no longer there; those that took advantage of re-mortgaging their property and other loans and paying off their KSF debts did so because they were able (i.e., other lenders believed their assets to be sound). It made good financial sense for those mortgagors to dump KFS debt and move to another cheaper lender -- the quicker the better. I would imagine that those who could did, and those that were not entertained by another lender remain with KSF paying higher interest rates because they're stuck with it.
The huge flow of early returns was made by those who could; leaving perhaps, those with assets that were not so highly prized by alternative lenders. We won't see those influxes of future monies paid early in any great number or amount now, it will be a steady drip feed of the remaining debt and perhaps more work to be done by the JLs in doing what they can with assets that are left outstanding. Let us hope this is nothing more than pessimistic hedging, but the JLs have done nothing other than predict a low return of 85% - 92% (leaving out the decimals!) and if Gordon's deduction is correct, they are still leaving room for loss.
Ice
Gordon, thanks as ever for an
Gordon, thanks as ever for an excellent summary and sterling analysis.
for the year ahead, the +6p/£ prediction (by the JLs) would seem to be the greatest area of concern; this alone approximates to the capital run off scheduled for 2012 without including for any returns via E&Y. Hopefully, as you say, the JLs are being conservative and don't already have information concerning likely delayed payments that will see large amounts carried forward into 2013.
Regarding the top 10 'loans' (this in response to Ice's posts elswhere as much as yourself); the JLs have consistently reported the total amount due from the top 10 loan relationships (as opposed to facilities). In the August 2012 report they showed a graphic of the distribution of all outstanding loans (facilities), which some were very quick to try and equate to the value of the top 10 loan relationships in the same report. The JLs have now apparently removed that confusion by only reporting in terms of relationships. To me at least, there is now more clarity, but I agree it would be 'nice' if there was some consistency in the reporting.
While it doesn't help us work out if we have been right or wrong in our assumptions in the past, I recall there was some discussion as to whether or not one of the >10m loans had been paid of or not last September, at least it helps us understand where our exposure is. Two entities (relationships) owe 38% of the outstanding loan book (across 2 or more loan facilities) or approx 3.5p/£ between them;3 entities owe 47% of the outstanding loan book or approx 4.3 p/£- a sizeable amount is owed by a few.
One other snippet I gleaned from the report was that £75.8m or 23% (see table on page 12) of loans recovered to date were through 'Enforcement Action'. I couldn't find a comparable number in the August 2011 report. We are sometimes quick to bash the JLs, but this is a sizeable amount which to my mind could have been significantly less given the currrent economic climate. Hopefully the potential for default in percentage terms is not as high on the outstanding amount.