Quote:
Originally Posted by Casey2296
I'm in private equity real estate loans, it's a simple equation, collateral + risk = rate, term, and loan to value. It's an interesting model to me, no foreclosure since I already am in possession of your collateral, more like a margin call, if the price of your 48 Jackie drops below our agreement and you can't pay the delta within 30 days the card is mine, I'll auction it off and get my money back plus some since I only gave you 50 cents on the dollar. These vaults a smart to only offer 12 month terms since the market is so violate. I would guess fair market rate should be in the 12-14% range and an ltv of 50%, and that's on solid pre-war, modern? Maybe 20%. And when you add the 1% transaction fee the rate of return starts to push the ROR an additional percentage point.
I can see why hedge funds would gladly fund a line like this with that model.
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That is exactly what I'm thinking and saying as well. What would be really interesting to see is a copy of one of PWCC's actual loan agreements that they have with these borrowers. If they were set up and operating as you mentioned you do in your business Phil, I would initially think the lender (which would be PWCC in this case) is likely not going to end up in any tough or problematic business position at all. But, if there is any truth to this other rumor/commentary about PWCC now needing to get additional funding to cover themselves so they can continue operating, that sends out an entirely different message as to what may be happening in this case, and how it may be affecting PWCC now, and going forward. As I said before, it will be very interesting to see where this may be going.