#9338 Bridge loan - 2.stage (Estonia) - Repaid Repaid: 24.10.2023
This loan is intermediated by Estateguru OÜ. For the general loan terms applicable to this loan, please see the Estateguru General Loan Terms.
- The loan is used to finance the purchasing of a property.
- The loan will be repaid by refinancing with a long-term bank loan.
- The loan is secured with a first rank mortgage.
- Borrower adds a 1% bonus to annual interest for investments of at least €20,000 (combined annual interest 10%).
- A plot with a detailed plan for a 14 storey building - Volta Tower I
- Gross area of 14 600 m2 above and 9 100 m2 underground (for parking).
- Eighty five apartments in total
- The Volta Quarter is located just between the sea and the Old Town in the neighbourhood of Kalamaja, highly regarded for its culture and entertainment scene.
- In the course of cooperation between Estateguru and Endover, €11 950 000 has been lent to Endover. All the loans have been repaid on or before the due dates. The two biggest project were Klaussoni Kommivabrik in Kalamaja (same area as Volta project) with total loan amount of € 5,507,470 and Rocca Tower A and B - €4 570 429 was lent.
- The borrower retains the opportunity to raise additional capital, if necessary, as the collateral value increases.
- The mortgage was established during a prior financing process and will also cover additional stages of financing.
- Prior to the next stage of financing, construction supervision must confirm the completed works (if construction has commenced and works have been performed in a considerable amount) and a third party must assess the market value of the collateral.
- The LTV in 2 stage is 13.8% and can increase to 70.0% in further stages.
- The development project is financed based on the value of construction invoices, which arise from construction supervision acts prepared on the basis of the work performed. Consequently, we consider the cost of construction work actually performed, in addition to the primary market value, to be the value of the collateral.
|Loan Contract Number|
Interest 9.0%Investment ≥ €20,000 = 1.0% Bonus
Collateral value €5,425,000
Projected LTV 70.0%
Loan Period 12 months
Schedule Type Bullet
Mortgage Rank First rank
Collateral Type Residential land (Land)
Loan Type Bridge loan
Loan Type Sub-Category Property acquisition
Moody’s Analytics: Credit risk score
Estateguru will submit its new loan projects to Moody’s to be assessed according to the Commercial Mortgage Metrics (CMM) model.
The assessment takes into consideration the location, value, cash flow and type of the collateral, loan terms (maturity, interest rate, etc), and other credit inputs. This credit risk score will then be displayed alongside the project on the Estateguru platform.
Moody’s Long-Term Credit Risk Scores: Definitions
Moody’s long-term obligation credit risk scores provide an indication of the relative credit risk associated with fixed-income obligations that have an original maturity of one year or more. These scores indicate the potential risk that a financial obligation may not be fulfilled as promised. They take into consideration both the probability of default and the potential financial loss that may be incurred in the event of default.
More about it - https://estateguru.co/blog/moodys-ratings-system/
Why is there an inactive account fee?
Your investor account is a special purpose account, and inactive accounts create administrative costs for Estateguru.
When does the inactive account fee apply?
The fee is charged from users who have deposited funds in their accounts but who have not made any new investments on the Primary or on the Secondary market for the last 12 months and who also have no active loans in their portfolio. Any loan that has not been repaid, including late and defaulted loans, count as active. Having such a loan in your account will prevent the fee from being applied.
Please note: the 12 month inactivity countdown begins from your last investment, but you will not be charged while you have active loans in your portfolio. This means that if you have not invested in 12 months or more, but are not paying the fee due to active loans in your portfolio, a month after these loans become inactive (repaid or written off), you will begin to pay the fee.
Making one investment (manually or by activating auto-invest), of as little as €50, will reactivate your account. Investments in both the Primary and Secondary markets apply. If you don’t wish to invest, withdrawal of all funds from the account will also cancel the inactivity fee.
Please note: You will be notified one month before the fee is applied.
What is the inactive account fee?
The inactive account fee is charged from inactive accounts. The fee amounts to 10 EUR per month for the first year following the 12-month period of inactivity (see next question for more details), and 50 EUR per month thereafter.
How is my investment secured?
EstateGuru's loans are secured with real estate collateral and a mortgage that is established on the collateral property. Once the loan is fully invested, the borrower has to go to the notary office and enter into an agreement with the Security Agent to establish the mortgage. The mortgage will then be registered at the Land Register (with the Security Agent as mortgagee on behalf of the investors). The Security Agent is a separate limited liability company whose primary purpose is to hold securities for the benefit of investors making investments via EstateGuru.
What is the difference between secured and unsecured lending and why is secured lending better?
An unsecured loan is a loan which does not have any collateral in place, such as land or apartment, and is solely based on a borrower’s credit history and potential ability to repay. Secured loans have assets as collateral so that if a borrower cannot repay the loan, EstateGuru's security agent will start the asset sales process. Hereby, the risk of losing the money lent to the borrower is minimized.
More about real estate collaterals can be found in EstateGuru's blog via the link
If all loans are secured, why don't the borrowers approach banks?
Banks have extremely tight lending criteria which could be more borrower friendly. Banks follow a very rigid funding structure and reject many loan applications.
Estateguru is a small and flexible organization that is willing to help companies denied financing by banks despite having a strong business plan and solid collateral.
Is the interest rate fixed?
Yes, the interest rate paid by the borrower is fixed throughout the loan period. The payment frequency and interest rate can vary depending on the loan. The interest rate can however be increased should the loan be prolonged for more than 6 months - in such instance interest rate is increased by 3%.
Do I earn interest on funds which I have not yet invested in loans?
We do not pay interest on uninvested funds. To get the best return out of our marketplace you should invest your available funds into open loans to minimize cash drag. EstateGuru has an Auto Invest function which will take care of your investments without you having to worry about it.
Why is my investment in "pending" status?
"Pending" status indicates that the funds have been raised to finance the loan, however the notary transaction has not occurred yet. Normally the notary transaction will occur within 1 week from the end of the syndication period, however according to EstateGuru's loan terms the loan must be placed into "funded" status at the latest after 15 calendar days + 10 working days from the end of the syndication period.
What is calculated under "reserved balance"?
Once a loan is in "fully invested" status and has not reached the notary transaction yet, all adequate investments are marked in investors' portfolios as "reserved" funds.
Are the earned returns taxed?
The return that you receive from borrowers or EstateGuru is gross income, which means that EstateGuru does not deduct any tax from the amount. All returns earned from loans are treated by tax authorities as investment income and is thus subject to income tax. EstateGuru does not provide tax-related advice and recommends that you turn to a local tax advisor for additional information.
What is the procedure if the borrower cannot service the loan?
The aim of the due diligence is to assess the company's ability to pay back the loan. We do a thorough investigation of the borrowers’ background, creditworthiness and current obligations. If applicable, the business plan and financial statements will also be investigated. As soon as the borrower is late in repaying an instalment, we will make contact on behalf of our investors to find out the reason behind the delay. In case of a delay, the borrower shall pay an indemnity specified in the general loan terms. When the borrower faces financial difficulties, we will try to find the best solution for both parties. If the borrower is unable to repay the loan, we will cooperate with our debt collection partners and security agent to recover the debt through selling the collateral via an auction that is organised by the bailiff agent.
What happens to my investment contracts if EstateGuru ceases to exist?
EstateGuru is a facilitator of real estate investments, we do not offer the management of assets. All investment contracts are signed between the borrower and the investor, EstateGuru simply facilitates this transaction. All client funds are separated from EstateGuru’s operational funds. Should EstateGuru suffer financial difficulties or go bankrupt, client funds are safe and can still be accessed. In such an unlikely event, a contractual entity will be appointed to take over the role of EstateGuru to serve all the investments.
What are the fees for investors?
Estateguru charges a 3% fee for selling claims via the Secondary Market (the fee is applied to the seller) and a €1 service fee which is calculated and charged every time an investor withdraws funds from the virtual account. The AUM fee is 0.05% of Performing Outstanding Principal, and is charged only from actual returns and when certain conditions are met (see Q&A "When is the AUM fee applicable).
An “inactive account fee” is charged as contractual penalty to users who have deposited funds in their accounts but who have not made any new investments on the Primary or on the Secondary market for the last 12 months and who have no active loans in their portfolio. The fee will be applied monthly in case there is a positive balance on the user’s account. If the cash balance is €0 then the fee will not be applied. If the user makes an investment, the account status will be switched to active again.
All fees can be found in our price list.