[photopress:nicholasLoup1.jpg,full,alignright]According to the official Shanghai Securities News property firm Grosvenor plans to buy two midrise residential buildings in Shanghai worth an estimated $66 million. The buildings are located in central Shanghai’s Xintiandi district.
In an interview in June Grosvenor managing director Nicholas Loup, seen here, said Grosvenor would start marketing its first fund dedicated to China in the second half of this year, with initial equity of $300 million to $500 million. Borrowing at a loan-to-value of about 50%, the fund could wield as much as $1 billion in spending power.
So what does loan-to-value mean?
Research suggests loan-to-value (LTV) ratio is a mathematical calculation which expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. For instance, if a borrower wants $130,000 to purchase a house worth $150,000, the LTV ratio is $130,000/$150,000 or 87%.
Loan to value is one of the key risk factors that lenders assess when qualifying borrowers for a mortgage. So an LTV of 50% is well on the side of the angels. What you are borrowing is half the appraised value of the property.