Fundbrick's credit scoring model for real estate projects is a comprehensive assessment that uses various parameters to calculate a risk score and thus determine an appropriate investor interest rate for the project in question. The model takes into account several key factors, including location, property type, overcrowding, developer experience, collateral, external risk management and political stability.
Location is assessed based on the distance to the five largest cities in Denmark and also takes infrastructure into account. In Sweden, the 3 largest cities are used as a starting point, and in Spain, the location is defined based on cities on the Spanish east/south coast where we have our business partners. Property type and project structure are assessed to identify potential risks. Overcollateralization is evaluated as the difference between project value and financing needs. Property type and project structure are assessed to identify potential risks. Overcollateralization is evaluated as the difference between the project value and financing needs.
The experience and track record of the project developer is crucial to assess their ability to handle challenges. Collateral includes real estate mortgages, share pledges and personal guarantees. External risk management provides an additional assessment by risk management firms. Finally, political stability is assessed to evaluate the political climate in the area.
Weighting these parameters and their individual assessment results in a risk score that is used to set an investor interest rate. The higher the risk score, the higher the interest rate investors will demand to compensate for the increased risk.
Ultimately, Fundbrick's credit scoring model enables the company to make informed decisions about assigning risk scores and investor rates to real estate projects based on a comprehensive and objective assessment of various factors that can affect the success and financial performance of the project.
Fundbrick's credit scoring model for energy projects is a comprehensive process that includes many evaluation criteria due to the complexity of the projects.
We conduct extensive data collection on energy projects and project owners. This includes information on project location, size, financing structure, project owner experience, previous projects and financial information. The purpose is to perform a risk analysis and set the interest rate level based on a character-based approach.
We use a variety of criteria to evaluate energy projects. Each criterion is assigned a weighting and the factor is given a score based on its impact on the attractiveness and risk level of the project.
A. Political Climate and Incentive Schemes: This assesses the political attitude and presence of financial incentives for renewable energy in the area.
B. Size of Energy Plants: This assesses the number and diversification of energy plants in the project.
C. Project developer's History, Experience and Reputation: This assesses the project developer's past performance and reputation in similar projects.
D.Collateral: This assesses the collateral offered for the project, including share/company mortgage and personal liability.
E. Budgeted Over-Coverage: This assesses the difference between the expected sales price and project costs.
F. Financial Ratios: This assesses various financial ratios to assess the company's financial performance and position.
For collateral and financial ratios, various metrics and grades are used to evaluate the company's financial health, profitability, liquidity and debt ratios.
There are different weightings for each evaluation factor. The grading scales range from 1 to 5, with higher grades indicating lower risk and higher attractiveness.