BuyBack guarantee in case of borrower's payments delay for more than 60 days.
Investments in the development project are executed through a previously issued loan by acquiring claim rights.
The loan has been issued by a German company to the borrower who is an experienced developer in German real estate market. Project location: Paderborn, North Rhine-Westphalia, Germany.
In 2016, the borrower successfully put into operation the 1st stage of hotel complex Dominik and acquired a neighboring land plot with a purpose to develop the 2nd stage of the hotel complex.
The loan is issued in the frames of 2nd stage construction and it is a purpose loan – the funds are intended for the preparation and approval of the technical project and providing technical communications.
Such loans, with a nature of interim financing (so-called bridge loans), with a 1-2-year term are typical for development projects – usually this period is required to complete the “zero cycle” of construction, after which the object, having at this stage a much higher market value, is refinanced by the bank. The given financing model is popular in many EU countries, including Germany.
The term of the given loan is 12 months. Maturity date is 22.02.2018. As an investor, you will receive monthly interest payments at annual interest rate 13%, calculated for the invested amount. The principal shall be repaid at maturity.
The loan is secured with the land plot collateral. The land plot is acquired by the borrower and its appraised value was 480,000 EUR at the moment of issuing the loan while the loan principal is 300,000 EUR. Market value of the land plot will grow as the project is completed. As an additional security, loan inititors provides BuyBack guarantee in case of borrower's payments delay for more than 60 days.
The loan initiator is business partner of the borrower, it is a leaseholder of its premises and accommodates its clients in the hotel complex «Dominik».