Arc & co. and Pluto Finance have completed on two development-to-investment loans, totalling £18 million, to a private residential developer.
The new facilities, structured by Arc & Co. and financed by Pluto, will enable the development of two residential build-to-rent assets, followed by an investment loan for longer-term holding on completion of construction. Located in the South East of England, the two schemes will provide a total of 181 residential units
The loans have been arranged at a loan-to-value ration of 60%, with the development investment finance secured at market-leading pricing on a three-year term.
Pluto Finance provided the client with a bespoke development-to-investment facility on both transactions. Such an approach brings significant benefits to the client, notably providing funding certainty following practical completion while rental income is stabilising, a key period in a BTR asset’s lifecycle. Both costs and risks are reduced by arranging investment finance in parallel to development funding.
Cameron Hayes, asset finance adviser at Arc & Co., said: “Build-to-rent continues to be a key focus for lenders, attracting some on the most competitive financing. It is great to complete on these two facilities with a bespoke funding solution that not only reduces costs but is also in line with the long-term strategies of both Pluto and the client. We look forward to working with them both on future opportunities.”
Arc & Co. expects build-to-rent to continue to be a core focus among real estate lenders, as affordability concerns resulting from the cost-of-living crisis, encourage more people to rent. Developing a quality product and building sustainable communities will remain at the forefront of investor appetite as new supply for affordably-priced housing lags behind demand.
Guy Norman, lending director at Pluto Finance, added: “we can now finance the entire lifecycle of a BTR scheme by adding stabilisation & investment financing to our existing development offering. This product gives our clients peace of mind (that they have funding secured for the whole project), saves time overall and avoids additional refinance costs (including arrangement and legal fees) once the assets flip from development into becoming a standing investment. It was a pleasure to work with Arc & Co and the developer.”
The Arc & Co. Group is a specialist asset finance advisory company based in Mayfair, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.
Pluto Finance is a leading provider of finance for housebuilders, property developers and investors.- Since inception, Pluto have financed the delivery of over 10,000 new homes. Pluto Finance is part-owned by the Universities Superannuation Scheme, the UK’s largest private sector pension scheme with over £80bn assets under management.