NEWS
Arc & Co. Completes Prime Residential Bridge for £5m GDV Project
Arc & Co. have completed a £2.1m residential refurbishment bridging loan to modernise a forgotten 7,000 sqft prime residential property back to its former glory.
Key figures:
Loan amount £2.1m
Leverage 65% LTV
Interest 1%pcm
Term 12 months
Located in 8 acres of prime Surrey Countryside, the property is in need of modernisation and has a Gross Development Value of £5m. The transaction was a challenging one with multiple titles and unregistered parcels of land causing issues within the conveyancing process. Given the nature of the asset itself and its high single asset value, finding a suitable funding partner was difficult.
The initial loan is set against 65% LTV which decreases as the work unfolds on site. At practical completion, the LTV will fall to 42% which was one of the contributing factors in the success of funding this project.
“I’m hugely grateful to both Luke Navin and John Wheeler for their diligent, patient and flexible approach in supporting the funding of this unique property. Their knowledge in this sector enabled them to provide the solution my client was looking for and enable an immediate start on site.” - Julian King, Asset Finance Advisor at Arc & Co.
“We were delighted to get this complex loan over the line. Julian King from Arc & Co. was on top of the deal from start to finish, from the initial site visit, to the myriad of complex legal and planning issues, with his dedication to the deal ensuring a quick and easy completion for his client.” - Luke Navin, Head of Lending at Century Capital
For any further information, please contact:
Julian King
Asset Finance Advisor
E: julian@arcandco.com
T: +44 (0) 20 3205 2190
Arc & Co. shortlisted for Development Finance Broker of the Year
Arc & Co. are proud to have been shortlisted for Development Finance Broker of the Year in the Business Moneyfacts Awards.
The Business Moneyfacts Awards, is the largest business finance awards ceremony in the UK and one of the highlights of the industry calendar. Rigorous product monitoring is carried out throughout the preceding year, and the broker and business communities are also consulted for their feedback. The Business Moneyfacts Awards logo is a widely recognised badge of excellence, and as a result, past finalists and winners have benefitted their businesses by showcasing their success.
“We are delighted to be shortlisted in the Business Moneyfacts Awards 2021. Thank you to everyone who has supported and worked with us during 2020.” - Edward Horn-Smith
Click Here for the full list of shortlists
Arc & Co. completes over £58m in two months
As we come to the end of the year, I wanted to take the opportunity to summarise our team’s fantastic achievements in the past two months in the busy run up to Christmas.
• Transactions completed: 26
• Loan amount total value: £58,800,000
• Average loan amount: £2,600,000
• Number of lenders engaged: 19
Despite everything, we have completed some amazing deals in the past couple of months. We are proud of the diversity in our financial solutions and the speed at which we have been able to assist our clients during this challenging year. Thank you to our clients, lending partners and network for making this possible. Wishing you and your families a merry Christmas and a Happy New Year.
Andrew Robinson
Chief Executive Officer
Arc & Co.
Highlights:
The Arc & Co. Private Finance team has welcomed 3 new members of the team: Kevin Eagles, Sean Adams and Ryan Abbotts
How can the NACFB Commercial Broker of the Year help your business?
As a fully independent broker, we pride ourselves on being able to understand our clients needs and deliver a bespoke service. Our aim is to find the best financing solution for your business needs, even in the most complex circumstances.
A Bespoke Approach
There is no one approach fits all when it comes to the commercial finance market. Our experienced specialist advisors approach each case on an individual basis to make sure they fully understand the situation and the advice they give is best suited to their client’s needs.
Technical Expertise
Our specialist advisors have in depth experience not only of the financial markets in which we operate but also practical experience of the opportunities and constraints facing our clients. The Arc & Co. team includes individuals that have professional experience with lenders, valuers and developers which combined with vast financial experience, gives us full insight into our client’s needs.
Access to less traditional solutions
Bank lending has become much more restrictive in recent years and the commercial finance market has seen rapid expansion in of lenders and liquidity within the market. We work with our clients to understand not just their short-term needs but also how we can structure a bespoke financing package that is relevant to their long-term business strategy. In doing this we are often able to recommend a more creative solution, taking into account a variety of products that fall outside of traditional bank loan facilities. We go above and beyond one lender’s proposition, considering the whole lending market.
NACFB’s Commercial Broker of the Year
Arc & Co. are incredibly proud to have been named Commercial Broker of the Year in the NACFB awards. Thank you to all our lending partners, industry relationships and clients, without whom this wouldn’t be possible.
We pride ourselves on being able to provide the most comprehensive advice through our extensive experience and knowledge of the market our strong industry relationships. If you feel your business could benefit from guidance or support from an award-winning firm with expertise in commercial finance, please get in touch here.
Private Finance Case Study: Bridging loan with Century Capital
Arc & Co. is please to have completed on a £1.3m bridging loan with Century Capital.
Background
Our Private Finance team was instructed by a Russian family, who due to poor advice from another source had defaulted on their loans 8 months prior, without a reasonable exit strategy during the pandemic period. The clients were retired, spoke limited English and had a poor credit score which meant they had struggled to find someone to assist them and most lenders were not able to offer the high level of gearing required. Their needs were also not straightforward as the financing was secured on land with three separate dwellings, each let on separate leases. The main aim was to save these main income producing assets and save the client from losing their investment.
Solution
We agreed a reduction of the 8 month default rate to an 8 month standard rate. The lender, Century Capital, agreed to refinance 72% LTV from a 180 day marketing value.
For any further information, please contact:
Nikita Nigai
Financial Advisor
T: +44 (0) 78 3321 1190
Kevin Eagles Joins Arc & Co.
Arc & Co. has further expanded it’s private finance team, with the addition of Kevin Eagles as its newest member
Kevin brings a wealth of experience in banking, starting out with Lloyds Bank and then, for the past 23 years, with C. Hoare & Co. While his customer portfolio was largely comprised of High Net Worth individuals, he was also the Relationship Manager to a good number of trusts, businesses, landed estates and charities.
“I am very excited to join Arc & Co. and to joining a team already well known for its high level of knowledge, experience, trust and integrity in both the Private Client and Commercial & Development sectors.”
Andrew Robinson says “Kevin brings a wealth of experience to the team and the strength and depth of his relationships will be a great asset to the Arc & Co. team. We are excited to have him on board.”
To connect with Kevin, drop him an email at kevin@arcandco.com.
Welcome to the team Kevin!
Arc & Co arranges £18.4m development loan for English Rose Estates
This week, Arc & Co completed a £18.4m development loan on behalf of English Rose Estates.
The developer required the finance to acquire existing offices and fund the conversion of 154 apartments in Worthing.
The brokerage was able to secure £14m of senior debt from Brydg Capital and £4.4m of junior debt from Rubicon.
The 77% LTGDV loan had a blended rate of 9%, with an arrangement fee of 1% and exit fee of 1.5%.
“It's been a privilege to act on behalf of our long-standing client, English Rose Estates,” said Edward Horn-Smith, managing director at Arc & Co.
“Brydg and Rubicon showed their experience in this transaction, adapting to unforeseen changes and meeting agreed timelines.
“I look forward to working with them both again soon.”
David Bendavid, director at Brydg Capital, added: “We are pleased to be working with such a highly experienced developer as English Rose Estates, and continue our ongoing relationship with Arc & Co.
“Its expertise in structuring this complex deal has been instrumental in successfully completing during a volatile market.
“Transparent and professional at all times, we look forward to working with them again in the future.”
Ben Fugler, director at English Rose Estates, commented: “We are delighted to have completed on this deal, allowing us to enter the next phase of such a well-located development.
“The scheme will give the existing building a new lease of life and will provide the area with 154 high quality homes.”
Pullman Construction will be acting as main contractor on the project.
Read this on Development Fiannce Today
If you would like to discuss any of your requirements, please reach out to Edward Horn-Smith.
Sean Adams joins Arc & Co.
Sean Adams, the newest member of the Private Finance team has joined Arc & Co. this week as Private Finance Director.
Sean has 25 years experience in property debt. Having originally founded the European Mortgage Company, Sean was director at SPF, running the International mortgage function, before setting up the European Bridging Company, aimed at finding short term debt and capital solutions for private and corporate borrowers.
He has extensive experience in the UK and European markets, on the private client side as well as within commercial and development finance. Sean will ensure Arc & Co.’s ability to service our clients overall needs on both HNW residential lending and structured finance.
A keen sportsman, Sean is an avid follower of football and rugby and coaches youth sport in his spare time. In the winter months, if you find he has a foreign ring tone, then he is most likely skiing in the Alps!
“I am extremely excited to join Arc & Co. in their next phase of growth and I look forward to utilising our combined experience to offer clients a complete and tailored property financing experience through a highly respected brand.”
Andrew Robinson says, “Sean is the second appointment in our Private Client team within the last four weeks. He brings a wealth of experience which will help combine the expertise of our Private Client team with our award-winning Commercial & Development team. This will further enhance Arc & Co.’s ability to serve all our clients’ debt needs under one roof.”
To connect with Sean, drop him an email at Sean@arcandco.com. Welcome to the team Sean
Read this on Bridging & Commercial
Arc & Co. advises on £9.26M development loan for 14 high end flats in Kingswood, Surrey
A fantastic start to the month for the Arc & Co. team with the completion of a £9.26M development loan.
Development Loan Breakdown:
· 92% Loan to Cost
· Blended rate of 8.3%
· 14 luxury apartments on edge of London
Quote from Client
“It was great to work again with Arc & Co. on getting the right finance to enable us to complete on time on another fantastic site, fitting our growth ambitions for this year. This site has really generous floor sizes which we will make the most of using the high specifications that we have successfully used on our previous developments”
Chris Lynch, Director of Kentish Projects.
Quote from Jeremy Robinson
“This is a fantastic scheme by a very experienced developer who delivers great product. It was a pleasure putting together a structured package that enabled the clients to make the most of their equity contribution”
For any further information, please contact:
Jeremy Robinson
Asset Finance Adviser
T: +44 (0) 20 3205 2199
Read this on Property Week and Development Finance Today
Ryan Abbotts joins Arc & Co.
Ryan Abbotts, the newest member of the Private Finance team has joined Arc & Co. this week.
Having spent the past 14 years at Coutts & Co and C Hoare & Co, Ryan joins Arc & Co. with a wealth of experience advising High Net Worth individuals in the UK and overseas within Private Banking, Corporate Banking and Wealth Management. He is experienced in delivering effective and tailored financial solutions with the highest standard of service and professional advice.
“I am very excited to join Arc & Co, the prestigious brand and abundance of experience within the team will serve as a great asset in delivering bespoke financial solutions to clients”
Andrew Robinson says, “Over the last decade we have worked very hard to create a brand and reputation that is built on knowledge, experience, trust and integrity in the Private Client sector. We are excited to have Ryan joining the team at Arc & Co. He adds substantial value to the business and enhances our ability to execute our strategy in the private client sector.
To connect with Ryan, drop him an email at Ryan@arcandco.com. Welcome to the team!
Real Estate Capital European debt advisors directory
The directory includes information on 42 organisations, including specialist property debt advisory firms and the European real estate debt advisory units of larger companies. Collectively, they report advising on a total of €109.7 billion of debt in European markets in 2019.
Formed in 2008, Arc & Co advised and completed on €598m in 2019.
Arc & Co. Structured Finance focuses on arranging funding for all sizes of residential development, commercial development and long term income producing assets.
Types of Funding:
• Senior Debt/Institutional Debt
• Stretched Senior
• Mezzanine Debt
• Equity
• Joint Venture
Asset Class:
• Residential
• Office
• Hotels
• Industrial
• Retail
• Ground Rent
View the directory here.
If you would like to discuss any of your requirements, please reach out to Edward Horn-Smith.
Arc & Co. strengthens Structured Finance team
Arc and Co. have further strengthened their Structured Finance team this week with a new member of the team.
Philip joined Arc & Co. after having spent the past 8 years working at commercial lender, Bank and Clients, focussing on financing real estate across a variety of assets including logistics/industrials, residential, PBSA, office and retail. Prior to this, Philip worked for UBS Wealth Management covering UHNW individuals and Family Offices. Philip is a CFA Charterholder.
To connect with Philip, drop him an email at Philip@arcandco.com. Welcome to the team!
Arc & Co secures £2.6m fully committed facility for Cambridge apartment scheme
Arc & Co has recently completed a fully committed facility to assist with the build of 10 apartments in Cambridge.
Written by Thomas Berry
The client who approached Arc & Co was seeking a higher-geared development finance product for their scheme, however, securing a 70% LTGDV facility can be difficult in the current market.
Arc & Co was able to argue the quality of the project and experience of the client to the lender, Ingenious.
The £2.63m loan was provided at 70% LTGDV and at 81% LTC.
The term is for 20 months and was lent at 8% per annum.
“When approaching a new development lender, especially in current times, it would be wise to ask your prospective lender if the funds are on demand or committed,” commented Tom Berry, asset finance adviser at Arc & Co.
“If the facility is on demand, the lender can recall the funds at any point.
“If they are fully committed, you have the security that the funds will be honoured until full completion.
“Having the security of funds in uncertain times, even with a slight increase in expense, is a small price to pay for control.”
He explained that developers are looking for fully committed facilities now more than ever.
“The current circumstances of Covid-19 have created a volatile market for development finance.
“Developers want the security and knowledge that there funding isn’t going to be called in halfway through the project.
“We are striving to secure options in the market with lenders such as Ingenious with fully committed facilities to provide the best possible funding for our clients.”
Harry Cloke, senior investment manager at Ingenious, added: “When we lend, we are committing to see the project right through to completion.
“Ingenious always provides committed facilities and we believe that confidence is a key reason for the lasting relationships we have created with so many of our developer partners.”
Read the full article on Development Finance Today here
If you would like to speak to myself or any of the team, please contact me by email: tom.berry@arcandco.com or phone: +44 (0) 20 3205 2192
THE ARC & CO. VIEW ON THE LIKELY CHANGES TO THE UK STAMP DUTY THRESHOLD
There has already been a lot of discussion around the likely changes to the UK Stamp Duty threshold and the government raising it to £500,000. Thank you to Grainne Gilmore – Head of Research at Zoopla, for her informative take on the imminent announcement. A link to the Zoopla article can also be viewed below. In the meantime, we asked Alistair Hargreaves – a Financial Consultant in our Mortgage team and Matthew Yassin - a Director in our Structured Finance team, for their views on Rishi Sunak’s highly anticipated announcement today.
“Clearly, any stamp duty holiday is a good thing for people buying properties that are lower in price and between £300,000 and £500,000. I think the change to the threshold is a good start, but probably not enough to kickstart the housing market overall.
When I have previously spoken to clients about such a change in a hypothetical sense, their response has been that it is really nice giveaway not having to pay the stamp duty up to the value of £500,000, however, it isn’t going to spur someone on to buy a house. If, for example, the Chancellor was able to suspend the stamp duty rate for a property up to the value of £1 million, that would make a real difference, because you’re then not having to pay £30-40,000 in stamp duty costs. And someone who is potentially looking to renovate, might think actually, let’s now move house because that £30,000 we would’ve either spent on a new kitchen or on stamp duty, if we had moved, will now go towards the property cost itself. So at this level, it would be a real radical change and signify to the economy and the world that the UK is trying to push things forward.
As it stands, I think the likely change of not having to pay stamp duty on a property up to the value of £500,000 is a nice touch and it will help some people, but it’s not going to be enough to spur a client to buy a property because they’re saving £5000. It will aid, but won’t lead to an increase in transactions.”
“Any discussion about a reduction in cost - whether in the property sector or any another industry, will be welcomed by the end user. I guess the issue here is the “talk” of a movement in stamp duty could potentially put the market into a deep freeze unless this is implemented immediately or disregarded just as quickly, as no market is comfortable with any speculation. If it is confirmed that the stamp duty threshold will increase to £500,000 at a future date, then inevitably there will be a pause on the sales that will qualify and are currently going through the motions, in order to take advantage. Saying that though, if the change was introduced immediately, I guess we would welcome any mechanism to drive progress and keep the market moving given the difficulties many have faced this year.
Although I feel this is a good move, it’s not actually that far reaching given that it is mainly aimed at those first-time buyers who traditionally struggle with the cost of purchasing at house so they can get onto the ladder. However, any help in this environment can only be a good thing and I guess those that are selling to the first-time buyers will be able to make future decisions knowing that the sales will progress. This in turn allows the market to have some certainty at the lower end and have an effect throughout the UK residential market as it is invariably connected.
From a monetary perspective, the saving for first-time buyers is welcome as any saving would be, and hopefully this will increase positive sentiment. ”
WEBINAR: Arc & Co. in discussion with Zoopla
Arc & Co. recently teamed up with Zoopla’s Head of Research - Gráinne Gilmore to co-host a 2-part webinar on the UK property market. Grainne presented recently published research which revealed that demand for housing in England has jumped above pre-lockdown levels, with 60% of potential buyers saying they will push ahead with their plans. Arc & Co. then outlined what is happening in the UK mortgage market from a broker/lender perspective and also, what is happening in the commercial & development lending space.
Watch PART-1 below, which covers:
Presentation of Zoopla’s research - led by Grainne Gilmore - Head of Research at Zoopla
An overview of the UK Mortgage market - led by Alistair Hargraves - Financial Consultant at Arc & Co.
An overview of the UK Commercial & Development market - led by Matthew Yassin - Director in the Arc & Co. Structured Finance team
PART-2 is also featured below, which sees us discuss the research and build on some of the trends. We discuss:
Pent up demand
Which aspects of the UK government support for the economy has shaped the property market outlook for H2 2020
With the projections of economic decline, whether people will sell now, if they have the opportunity, but then rent to see how the market goes
Whether the London property market recovery is slower due to businesses not been open, or are we seeing a flight to the countryside?
ABOUT ZOOPLA
Zoopla provides users with access to information such as sold house prices, area trends & statistics and current value estimates for domestic properties in the UK. Grainne was previously head of UK residential research at Knight Frank and before that had a successful 11-year career as a journalist for The Times.
L-R: Matthew Yassin, Gráinne Gilmore and Alistair Hargreaves
How to enhance your corporate strategy through the use of mezzanine finance
In this second post written by Cameron Hayes on mezzanine finance, we highlight the ways in which developers can make the process of ‘gearing up’ more streamlined. As we discovered in part 1 of the blog series, being able to secure a higher leverage can open doors to new projects and allow developers to scale-up by allocating less equity to an individual project. This is a popular form of recourse in a buyers’ market if the borrower is appraising lots of new sites and requires additional liquidity to spread capital across multiple investments.
Mezzanine finance is often considered too expensive, due to most loans being priced in double digits. Mezzanine finance however, allows a developer to borrow more capital and enhance their return on equity. Borrowers should therefore be encouraged to look at the performance metrics of the deal and focus on overall pricing, as well as the return on equity versus risk.
If using independent mezzanine and senior loans, developers often believe that this will result in higher overall pricing. However, as Arc & Co. has previously highlighted, the blended rate - which is the combination of the rate charged by the senior debt lender and the mezzanine finance lender, is often competitively positioned to provide the developer with a ‘pricing edge’. In these current times, with some stretch-senior lenders reducing the amount they are willing to lend, the ability to achieve higher leverage can also include stretch-senior debt providers and mezzanine finance lenders working together.
The benefits of blended pricing sometimes comes with a slight trade-off given the time working through legal documents with the additional mezzanine provider. Upon securing the mezzanine debt, the two lenders (senior/mezzanine or stretch-senior/mezzanine) will enter into an inter-creditor agreement which outlines the various clauses which will set the scene between both parties for the duration of the loan(s). Certain clauses are often drafted into inter-creditor agreements and mezzanine finance agreements which permit the mezzanine lender to have some protection throughout the duration of the loan. This cushions them from adverse scenarios, which are important given the second charge nature of the mezzanine lender’s security position. It will typically include the ability to cure a senior loan default or the ability to buy-out the senior debt provider’s position - both of which occur at a juncture that may affect repayment of the mezzanine facility
In many cases, a well-established mezzanine funder will have an existing inter-creditor deed in place with most senior debt providers, helping forego some of the additional time spent working through such clauses. As Mark Quigley, Managing Director at Beaufort Capital, highlights:
““Since its formation in 2013, Beaufort has established strong banking relationships with most high street banks, challenger banks and alternative financiers. Having these partnerships in place allows us to progress through the legal process extremely quickly and in essence, gives the borrower something akin to a whole-loan solution between lending parties which have worked together on other schemes in the past. Sitting higher up in the capital stack, means that we are heavily invested in the scheme and our interests are fully aligned with the borrower in delivering a profitable project. In addition, the founders of Beaufort are property developers in their own right and are able to see things very clearly from a client’s perspective and can add significant value when assessing a lending opportunity.””
Arc & Co. witness new entrants to the lending market on a weekly basis. In recent times, the team has seen a lot of private capital being deployed into new funds and vehicles in an attempt to capitalise on lower values. Arc & Co. has established relationships with lenders across the capital stack and this includes institutions and banks, through to private family offices, credit funds, private equity houses and HNWs. Each of these lenders seek different returns to satisfy their lending profile and the team at Arc & Co. are well positioned to advise on structuring inter-creditor relationships between debt and equity financiers. This can make the coupling of senior and mezzanine lender more streamlined if, for example, more debt is required and at relatively short notice.
In recent weeks, increasing amounts of investors are requiring greater liquidity within their business for cash-flow purposes or looking to actively manage their equity across different projects. Arc & Co. has, as a result of this change, been more actively involved in working with lenders higher up the capital stack. We are a trusted advisor to clients looking to fortify their financial strategy and explore alternative financing solutions.
Contact
Arc & Co.’s 3-Part Blog Series on Development Finance: how to build strong sustainable relationships
We are pleased to present a short video presenting Part 2 of Tom Berry - Asset Finance Advisor at Arc & Co.’s 3-part blog series on Development Finance. This video talks about how developers can build strong and sustainable relationships with their lender and advisor during the Covid-19 pandemic. The full article is also featured below in written format.
Part 2 of ‘Development Finance: How to build strong and sustainable relationships’. Presented by Tom Berry.
THE FULL ARTICLE
During periods of uncertainty, developers will need to review and potentially alter their overall strategy – especially when it comes to their financial structures.
We feel that it is more important than ever to ensure strong and sustainable relationships are built between developers and lenders for now and the months to come.
This comes down to communication between the developer and their current or prospective development lender.
Communicating with the current development lender
We encourage developers to speak to their current lenders in relation to the following situations arising from the Covid-19 pandemic.
Interest and cost overruns
o Interest and cost overruns are an unlimited guarantee for a loan as opposed to a limited PG guarantee - therefore meaning there is no limit on how much cost could be inflicted should the scheme overrun;
o Currently, it is probable that there will be delays in completing development schemes. This might affect the cost of the loan; therefore it is advisable to negotiate an extension of the loan with your lender. This avoids potential added cost via interest and cost overruns, should your loan have this guarantee;
o Some lenders have addressed this already, by giving an automatic 6-month extension to the loan term for developers. Examples we have seen in the market are lenders contacting the client directly to make them aware that they have automatically extended the facility. Even though this breeches the original agreement, the lender has taken precautions to protect the profit involved within a scheme.
If a developer is approaching practical complication with a strategy to build and sell
o Due to changes arising from Covid-19, a developer may wish to alter their current strategy for a scheme that is due to PC. In current market conditions, the market for moving and buying is slowing;
o Social distancing has created certain obstacles, such as removal companies being unavailable. Also, the uncertainty of unemployment is resulting in people not wanting to commit to moving home - especially those who have been furloughed;
o Firstly, talk to your lender about extending the loan, which would give you as the developer more time for the sale period. This is the most efficient way of extending your strategy;
o You may also want to reconsider your strategy for the sale. Consider introducing the idea of a build-to-hold strategy, in addition to a build-to-sell strategy. The build-to-hold strategy would see a developer retain part of the development on a medium or longer-term facility such as a development exit bridge loan for 12 months, or perhaps a buy-to-let facility for 2-5 years;
o The strategy could also be to continue advertising part of the development for sale, giving the developer immediate funds in order to reduce their debt exposure. And then refinancing the scheme onto either a bridge or longer-term facility, thus creating passive income in addition to sales. Providing the current development lender grants permission to proceed with this strategy, the benefits are also beneficial for the long-term, as it will expand the developer’s lender relationships through a scheme for both the now and the future;
o The developer could potentially utilise all three of the exit strategies mentioned; short term – immediate sales, medium-term – bridge facility, and long-term – buy-to-let or a term facility for circa 5 years. By doing this, the developer would be protecting their profit margin and spreading their sales risk; protecting the maximum value of the property and thereafter its return on investment.
Creating new relationships with lenders
We encourage developers to consider the following options when approaching a new development facility during the Covid-19 pandemic.
On demand or committed development facility?
o When approaching a new development facility, especially in current times, it would be wise to ask your prospective lender if the funds are on demand or committed;
o If the facility is on demand, the lender can recall the funds at any point. Of course, if they are committed, you have the security that the funds will be honoured;
o Committed funds can be more expensive, however in our opinion, choosing a lender with committed funds in the current climate would make the most sense. Having the security of funds in uncertain times even with a slight increase in expense, is a small price to pay for being in control;
o In short, with a facility offering committed funds, the developer is in control. With on demands funds, the developer is not.
Reliability
o Having a reliable lender to work with creates security over the scheme. Knowing that the lender has the ability to deliver the funds required - not just at the outset, but throughout the course of the scheme, is pivotal to a developer’s return on investment;
o Having a lender who you can develop a personal relationship with is a good strategy in order to make good decisions on time. How approachable is the lender that you deal with? How much control does that individual have in order to deliver your requests promptly? Human interaction in a volatile market is critical to making quick decisions on time. Simply put, a lender that has too many layers in their company to approve your requests, can lead to delays;
o In addition, work with a lender who doesn’t just deliver the funds on time, but a lender who understands the development process and can work with the client throughout the course of the scheme. An example being, having a good quality project monitoring surveyor so that what is planned is delivered on time to prevent any lapse in time.
What do Lenders look for in developers?
o In the current climate, these key points are more important than ever when acquiring a new development facility;
o Whilst the scheme itself is important, lenders will focus on assessing the developer’s ability to deliver -which is reflected in their past history of delivering similar schemes. This involves analysing the developer’s previous experience to prove that they can achieve what is outlined;
o The lender will also want to understand the make-up of the developer’s wider team such as the contractors, architects etc, who will contribute to the delivery of the development. In addition, some lenders may wish to look further into the wider team for assurance. For example, understanding the contractor’s financial stability. If the contractor is facing financial difficulty, they could be unable to perform during the course of the development.
Summary
The key point to major on is – communication.
In difficult times, communicating with your current lender, as well as your finance advisor regarding prospective new lenders is key. Make sure that the points we have covered: interest and cost overruns and on-demand or committed facilities are considered in tandem with finding a reliable lender with whom you pursue a sustainable relationship. All of this is key in an unpredictable market.
ARC & CO. APPOINTED AS DEDICATED DEBT ADVISOR TO AMBER LION CAPITAL
We are pleased to announce that we have been appointed as Amber Lion Capital's dedicated debt advisory firm; working closely with their International client base.
Amber Lion Capital is a newly-launched wealth and asset management firm with the addition of debt advisory and venture capital services. The firm is headquartered in Zurich and is led by CEO, Avy Burstin, CFA – previously the Managing Director and Founder of the Russian desk successively at Société Générale and then at Bank J. Safra Sarasin.
Amber Lion Capital is set to transform the world of wealth management through the use of performance-based compensation models. This will enhance the way that private wealth clients secure, and benefit, from wealth management services and enable optimal returns.
Andrew Robinson - CEO of Arc & Co. comments: “We are delighted to be appointed by Amber Lion Capital as their dedicated debt advisory firm. I have personally known the team behind Amber Lion Capital for a number of years and the calibre of the individuals combined with their innovative approach to pricing and performance, will provide a USP in the finance and wealth management industries. I look forward to working together.”
Left: Avy Burstin - CEO of Amber Lion Capital
Right: Andrew Robinson - CEO of Arc & Co.
ARC & CO. COMPLETE ON TWO LOANS TOTALLING £13.5 MILLION
Arc & Co. are pleased to announce the completion of 2 loans for an existing client totalling £13.5 million; with the requirement that both loans completed simultaneously.
The loans comprised a £10.5 million loan provided by Brydg Capital and a £3 million loan provided by Ortus Secured Finance.
Brydg Capital provided a £10.5 million loan for the redevelopment of a warehouse building in E1, London, to create 15 apartments with commercial space on both the ground and lower ground levels.
Brydg Capital agreed on the loan terms prior to the Covid-19 pandemic taking hold and didn’t amend the terms in any way, despite the widespread changes to market conditions.
Ortus Secured Finance provided a £3 million exit bridge loan for a completed development in WC1, Central London. The development comprises 13 apartments, 2 houses and 2 office blocks, with all parts now sold bar 3 residential units.
Ortus Secured Finance completed on the loan in 10 working days – an impressive achievement given the current market conditions resulting from the Covid-19 pandemic.
“Edward Horn-Smith – Managing Director of Arc & Co.’s Strucured Finance team comments:
“I am delighted that we have been able to complete on these two loans and deliver the solutions required by the client. What is most impressive is the team behind these two loans – comprising a number of experienced and well qualified lenders, lawyers and trust companies, all being able to work seamlessly to the point of completion whilst working remotely from home. The ability to complete on the loans in these current market conditions is testament to the two lenders and their unfaltering commitment throughout.””
Edward Horn-Smith - Managing Director of Arc & Co. Structured Finance
“Daniel Bendavid – Managing Director of Brydg Capital commented: “We are proud to be able to support our clients in these uncertain times with the help of our trusted relationships, like Ed at Arc & Co.””
“Jon Salisbury– Managing Director of Ortus Secured Finance commented: “We are always delighted to work with Arc & Co and they are a hugely impressive outfit. The Covid-19 situation presented a few interesting challenges, but with Ed’s help and the support of our professional panel, we still managed to deliver a great borrower experience.””
About Brydg Capital
Brydg is a new generation lender and they provide short term, property-linked funding. As a brand, they are committed to providing bridge financing with transparency and speed attached to it and rated as a trusted partner in property finance. Brydg are serious about their commitment to responsible lending and put their customers at the heart of what they do.
About Ortus Secured Finance
Ortus Secured Finance are an award-winning commercial lender based in central London with offices in Belfast and Manchester and were founded in 2013. Operating throughout the UK, Ortus provide loans from £100k to £25 million with interest rates from 7.8% p.a and terms of up to 3 years. Ortus are happy to lend into a wide range of sectors including residential investment property, commercial (including mixed use) and leisure businesses such as pubs and hotels.
ARC & CO. COMPLETE ON COMMERCIAL LOAN FOR OFFICE SPACE IN SPITALFIELDS LONDON
Arc & Co. are pleased to announce the completion of a refinance loan totalling £1.5 million for 3,500 sq. ft of vacant office space in Spitalfields, London. Tom Berry from Arc & Co. lead on this deal.
The client, who recently redeveloped the ground floor commercial office space, was looking to refinance his development facility at the end of its term. Our brief from the client was to find a bridging option that would base the leverage on the open market value (OMV) of the property whilst still being vacant. A short term bridging loan of 9 months was requested based on estimatiations to sell the property.
Arc & Co. arranged a development exit bridge loan at 70% Loan-to-Value (LTV) and at an interest rate of 0.75% with a full interest roll-up on a 9 month term.
Tom Berry – Asset Finance Advisor at Arc & Co. commented: “It was a pleasure to work with the client to find a lending solution in a short space of time and help revise the asset strategy. We are finding that an increasing number of our clients are benefitting from short-term bridging loans as they provide flexibility and speed.”
Colin Stevens – Head of Bridging Finance at PCF Bank Limited added: “Tom, thank you for your help in getting this deal over the line. Your help with funding this project and ability to manage the various moving parts was very helpful. I hope we are able to do many more deals together going forward.”