Monday, October 8, 2012

Ecuador Revisited

The property north of Quito, near 10,000 feet above sea level

My previous Ecuadorian land appraisal reports [see July] were not favorably received by the loan applicant when I valued the two properties as the marginal agricultural land that they were. Besides, this loan applicant had not even received solar farm licenses yet nor had purchased the parcels or presented purchase contracts. The rebuttal was that Ecuadorian land was much more valuable than California solar farm land that I was used to appraising, a concept that sounds somewhat silly since I receive International Living and Pathfinder Alert e-mails every week declaring Ecuador to be the ultimate real estate bargain.
The farm in Guayas. The unique trees are called "ceibos".

The developer pointed out the massive profits to be made in solar farming – so profitable, in fact, that the location or choice of land did not matter to him.  This rebuttal proved counterproductive to his wishes, as my client is a collateral lender who was being offered only the land as collateral for their loans.  There were no solar farm improvements on these parcels, nor were there solar farm licenses. 
If 99% of the value of a solar farm is in the improvements, then very little of value was being pledged as collateral for the loans, leaving the loan almost unsecured prior to the receipt of solar development licenses and their subsequent development.  This is not a desirable position for a lender to be in, and is particularly unacceptable to a collateral lender.
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