Arc & Co. Secures £11.9m loan for London Development

Cameron Hayes, Arc & Co. has completed a loan for £11.9m secured a commercial site with planning for residential consent in South London.

The property is an existing retail site with planning for a mixed-use scheme comprising over 200 residential units and ground floor commercial.

It is the second deal that Arc&Co. has completed with Market Financial Solutions this quarter, totalling £25m of lending together.

Cameron Hayes, Asset Finance Advisor at Arc&Co. commented, “We are very pleased to get this one across the line. It’s the first development that will be brought forward by the client in this part of London. It neatly fits as part of the wider regeneration, coming relatively early within the new plans from Southwark and the GLA. We look forward to working with MFS and the client more over the coming months”.

Paresh Raja CEO, MFS says, “It was a pleasure working with Arc & Co on this deal. We were glad to be able to get this large mix-use loan completed quickly and seamlessly for the client. It’s very rewarding to work with brokers that really understand their clients. We look forward to our next cases with Arc & Co, making finance accessible for many more borrowers to come.”

Arc & Co. completes two loans with Century Capital

 Arc & Co. have completed two residential bridging loans with Century Capital.

The first, a £2.1m second charge bridge on a prime residential apartment in Knightsbridge for a term of 18 months. The case involved complex KYC due to international origins. The purpose of the loan was equity release with a 66% LTV for business purposes.

The second loan, also equity release was a £1.5m senior bridge on a house in oxford for an overseas foreign national. The loan was 30% LTV for an 18 month term. The client had a complex income structure and funds were to finish refurbishment of the existing property.

Nikita Nigai says, “Both clients had reached out to various people in the market and weren’t satisfied with the options available to them. It was a pleasure to work alongside Century Capital who understood the client’s requirements and complete on both deals.”

Arc & Co. appoint Paul Davies as Regional Chairman, APAC

Arc & Co. are pleased to announce that Paul Davies, has been appointed Regional Chairman, APAC.

Paul has over 30 years experience in the financial services industry, having held senior positions at NatWest Bank and Coutts in the UK, in Switzerland, India and in Asia. For 15 years Paul was based in Singapore and was instrumental in building Coutts Bank’s Asian business which focused on High Net Worth (HNW) clients in Singapore, Malaysia, Indonesia and Thailand and Global Non-Resident Indians. His previous role was Vice Chairman of Coutts, Southeast Asia.

Since leaving Coutts, Paul focuses on providing strategic business development advice to companies in the Wealth Management and Philanthropic sectors. Paul is currently a Board Director at a Singapore charity AIDHA who help migrant domestic workers and low-income Singaporean women create sustainable futures through financial education.

Andrew Robinson says “Part of Arc & Co.’s growth strategy is to focus on regions around the world that have a direct influence on the UK and European real estate market. For many years, the APAC region has had a significant influence on these markets across all assets including residential, commercial and development. Paul’s depth of experience and reputation in the banking industry will help to guide Arc & Co.’s growth strategy and will be working closely with Sophie Brown who has been working with us for the past 10 months.”

Paul Davies says “I am delighted to be supporting Arc & Co. in the development of our business in Asia and also through my broader global network of contacts built up during the course of my career “

Arc & Co. secures £2.8m development facility for the development of 8 houses in West Finchley

Julian King, Director within the structured finance team at Arc & Co. has secured a £2.8m loan for his client, a Hong Kong based developer developing 8 houses in West Finchley. There were a number of constraints in completing the facility given the offshore structure of the borrower, as well as site constraints to include tight access and egress. The scheme itself is excellently located and well designed, providing attractive family housing on an otherwise derelict site.  

Julian King says, “This is the second transaction I’ve been involved in with my client who is actively seeking development opportunities across London. The development of this site will be an excellent addition to their growing portfolio and I look forward to working with them throughout the lifecycle of the project”.

The £2.8m development loan was provided by Secure Trust Bank, to aid with the site purchase of the Former West Finchley Bowls Club and to deliver funding in which to construct the 8 houses, completing in Q2 2023. The loan provided by Secure Trust Bank was for 60% LTGDV priced at 5.99% p.a David Burke, Lending Director at Secure Trust Bank said “It was our first deal with the customer who was extremely well represented by Julian and Arc & Co, who also did a great job to supporting STB in manging the process to completion. We are always excited to be working with new to bank customers and we are looking forward to building this excellent scheme in Finchley together”.

Arc & Co. completes £11.5m loan to enable energy efficiency upgrades

Matthew Yassin, Director from the structured finance team at Arc & Co. has successfully secured a £11.5m loan with Interbay Commercial on mixed use office space in Lambeth. The purpose of the loan was equity release to cover costs incurred by improving the environmental standards of the building through installation of solar panel and a water harvesting system. 

Interbay Commercial worked as the senior lender to provide a whole loan solution for the client at 87% against vacant possession value and 71% against investment value. The loan is a 10-year committed term with a fixed rate for the first 3 years that gives flexibility to the client.

Matthew Yassin, director for structured finance at Arc & Co (pictured above), said: “It’s extremely satisfying to be able to provide liquidity to support this ESG initiative, which has now become much more mainstream, as people are becoming more aware of the environmental impact that property has on its surroundings.”

The office space is an important part of Lambeth’s industrial heritage as it was the main factory for JA Sharwood & Co Ltd - a business that thrived locally and continued to thrive first with Rank Hovis McDougall and then Premier Foods. The site consists of 16 media offices, with a canteen, auditorium and studio space.

Arc & Co. secures £5.4m development facility for Farleigh, supporting their growth within central London

Julian King, Director within the structured finance team at Arc & Co. has secured a £5.4m loan to further support the growth of his clients Farleigh in their expansion within Central London. It is the third development that Arc & Co. have supported Farleigh on as they expand their output of developing residential lead schemes across London and the South East.

Julian King said, “It’s a pleasure working so closely with the team at Farleigh and to see their company grow from strength to strength. They have a very strong product in todays demanding residential market and know exactly how to deliver it on time and on budget, further proven by the record sales achieved on each of their sites”.

The £5.4m development loan was provided by HTB in under 6 weeks, to aid with the site purchase in the borough of Southwark and for the construction of 9 units. The development made up of 6 apartments and 3 town houses located within walking distance of the City and the mainline railway stations of London Bridge. The scheme has a GDV in excess of £8.5m and will complete in spring 2023.

Will Powell, Lending Director at HTB said “‘It is always a pleasure dealing with the team at Arc & Co. and our latest completion of a well-designed scheme of houses and flats for Farleigh is an excellent example of the quality of business in the market at the moment.  Farleigh are a returning customer of the bank and the loan was drawn down under exacting time pressures owing to the structure of the purchase agreement.’

Arc & Co. continue to support the growth of Farleigh as they secure further sites to facilitate their 2022/23 pipeline, working together to meet their funding requirements to appropriately structure the funding required from their corporate strategy.

Robert Mulligan, co-founder of Farleigh said “Working with Arc & Co. has given us the confidence to build on our success in Bath and Bristol, and to focus on growth in London and the South East. Julian’s in-depth knowledge in development and structuring debt, coupled with his relationships in the lending market has enabled us to partner with some of the industry’s best lenders. We see them as an extended part of our own team, they know our model and how we like to structure things as well as having their finger very much on the pulse of the debt market which in the last few years has been a changing marketplace. We are looking forward to seeing this latest acquisition come out the ground Q1 2022.”

Arc & Co. complete their first loan with Bmor

Arc & Co. has completed a £1.4m acquisition loan for developers Bmor and Sam Burt Enterprises and lender, Atelier Capital Partners in Nottingham. The loan is to fund the purchase of a vacant 19th century school on which ­Bmor has recently obtained planning permission to convert and develop a 155-bedroom PBSA scheme.

Deal Outline:

•               Loan size: £1.4m

•               Lender: Atelier Capital Partners

•               Asset: vacant school with planning permission to convert and develop out a 155-bed PBSA scheme

•               Type of finance: Acquisition Bridge facility ­

•               LTV: 55%

Deal Complexity

Bmor is currently involved in several development and regeneration schemes across Nottingham, including a vacant retail unit and 100 beds in Goosegate as well as the Heathcote Building in Hockley which is a 32,000 sq. ft. office refurbishment with ground floor retail. In terms of student schemes, Bmor recently executed a partnership agreement with Unite Students to redevelop a £34m, 270-bed student-led residential scheme in the city centre.

The scheme backing this transaction is the former Radford Boulevard School on Ilkeston Road which is another of Bmor’s joint ventures with local Nottingham developer, Sam Burt. Having recently obtained planning permission for a 155-bed PBSA scheme, the property will be regenerated to create a unique student scheme.

In terms of acquisition funding, Atelier were able to structure an equity release over and above the site acquisition cost which was an attractive element of the transaction.

Philip Kay, Senior Asset Finance Advisor at Arc & Co. says, “It was excellent to work with both Bmor and Atelier on completing this loan, which will be the first stage in achieving Bmor’s business plan for this excellent asset. As a business, we’ve known and followed Bmor for several years and are delighted to complete this transaction with them. We hope it will be the first of many.”

Paul Irwin Director of Bmor says, “It was a pleasure working with Arc & Co. and Atelier Capital Partners on this complex transaction.  They understood the fundamentals of the student market well and enabled a smooth and swift transaction. We would be delighted to work with Arc & Co and Atelier on our future projects. We look forward to bringing this £20m GDV scheme to the market in due course.”

Arc & Co. completes a £10m Development Loan with Close Brothers

Arc & Co. has completed on a £10m pre planning development loan on the basis there was an existing asset with plans to develop prime houses in South East London with Close Brothers. The loan was value based of the existing use.

Key Points:

-          Loan £9.98m

-          LTC 85%

-          Located in South East London

Matthew Yassin at Arc & Co. commented “Once the lender was engaged, the deal took 8 weeks to completed from start to finish, with excellent communication from both Client and Lender enabling a smooth transaction. The key factors for this to get over the line were very much the expertise of the lender, the approach and understanding from the client’s side who was a pleasure to work with.

The main obstacles with this project were centred on the delays within the planning department and the client was under pressure from the vendor to complete. The lender took a pragmatic approach and was happy to complete prior to planning being sanctioned based on the strength and experience of the client.”

Laura Metcalfe at Close Brothers commented “The excellent communication between us, the Client, Broker and our solicitors ensured we were able to complete this deal within the required timescales. Matthew at Arc & Co provided a full appraisal and was upfront about the quirks of the deal, which enabled us to provide reassurances early on that this was something we could assist with.

With planning due imminently, we are looking forward to building our relationship with both the Broker and the Client and look forward to seeing this development take shape over the coming months.”

Arc & Co. completes £12m commercial refinance with Market Financial Solutions

Arc & Co. has completed on a £12m bridge loan secured against commercial property with planning consent for residential in Greater London.

Key Points:

-Lender: Market Financial Solutions (MFS)

-Loan Amount: £12.3m

-Term Length: 12 months

-Loan-To-Value: 70%

Edward Horn-Smith at Arc & Co. commented; “The client required a funding solution to refinance existing debt and provide time to enable sale of the property. After a short tender process we sought MFS as the best suited counter party.  They executed on the terms agreed from the offset.”

Imogen Williams, Regional Sales Manager from MFS stated: “Arc & Co discussed a proposition with us that had huge potential and a thorough briefing. After reviewing the information and agreeing the deal at credit, we then worked with Ed and the team to get it over the line as swiftly as possible. Elements of the deal changed within the term through no fault of anyone involved however, we decided to honour our all our agreements from the start of the transaction.

Richard D’Souza, Underwriting Manager from MFS added: “The logistics of the case can change during the process. When this happens, transparency and clear communication from both sides is essential to avoid confusion and ensure the process continues smoothly. We worked closely with Arc & Co on this case to ensure their client was kept informed and updated – as well as working quickly to ensure they received the funds they needed.”

Arc & Co. grows its Structured Finance team

Oliver Holden has  joined Arc & Co. after having spent the past 7 years working for the commercial debt advisory team at SPF Private Clients, focussing on financing real estate across a variety of sectors including logistics/industrials, residential, student, office, hotel and retail. 

Oliver says, “I’m excited to be joining the excellent team at Arc & Co. and to be part of their award-winning advisory service which stands as one of the very best in a congested and competitive space” 

Andrew Robinson says, “We are excited to have Oliver working with Arc & Co. He brings vast experience and industry knowledge which will add value to Arc & Co. and our clients.” 

The recent appointment of James Fleming as Chairman is giving Arc & Co. the direction, strategy and structure to attract the best advisors which is needed to progress Arc & Co,’s position in the market. The competition in the market is becoming stronger and stronger which is great for the consumer as Advisory standards will continue to increase.

To connect with Oliver, drop him an email at Oliver@arcandco.com. Welcome to the team!  

Arc & Co. appoints experienced banker as Chairman

Arc & Co. are pleased to announce that James Fleming, has been named Chairman of Arc & Co.

James was formerly Head of International Banking at Coutts & Co., Chief Executive of Arbuthnot Latham and most recently Chief Executive of Sandaire, the multi-family investment office.
Arc & Co. are expanding both in personnel and the markets in which they operate. James’s experience in running large banking teams and designing and implementing company structures whilst ensuring the highest quality advice is given to clients will give Arc & Co. the experience and support to execute their growth plans.

Andrew Robinson said: We are delighted to welcome James as our Chairman. Over the last decade Arc & Co. has developed a strong brand and reputation in the advisory market. It is time for Arc & Co. to appoint a Chairman to take us to the next level. As the market competition gets stronger, we are keen to evolve our proposition to make sure we stay at the forefront of the market. James has a vast amount of experience with some of the most important banking brands in the UK. Working with James will allow us to execute our plan whilst making sure we keep the highest advisory standards.

James Fleming said: I am delighted to join Arc & Co. as Chairman. Arc & Co. has a very strong brand in the debt advisory market and is developing some ambitious plans for its next stage of growth. I am excited by the prospect of adding my experience to the senior team and helping them bring their plans to fruition.

Arc & Co. completes £27M development loan with Burrington Estates

Arc & Co. are pleased to announce the completion of a £27.m development loan with Burrington Estates

Deal Highlights:

• Lender: Octopus RE

• Client: Burrington Estates

• Senior Loan: £27,275,000

• Security: over 4 office buildings totalling 170,000 sqft

The facility with Octopus RE is to provide a refinance of existing debt and fund the capital expenditure works on four office buildings, totalling 170,000 sq ft on the outskirts of Exeter.

The deal was under tight time constraints, with two of offices having leases agreed and due to start in the new year. Ensuring the funding was in place before the next drawdown was key to meeting the tight deadlines on completing the work. With an existing relationship with Octopus, Arc & Co. were able to secure a competitive solution to ensure funding was provided to meet the client’s overall strategy to deliver two new office buildings on the site.

Cameron Hayes, Asset Finance Advisor at Arc & Co. says, “Octopus and Burrington were both a pleasure to work with. All parties were very cooperative and worked with speed to deliver this on time.“

Matthew Bennett, Commercial Managing Director at Burrington Estates says, “It was the first time working with Arc & Co and they were excellent in helping us deliver this within 8-weeks. We look forward to building the relationship with them as 2021/22 evolves.”

Over the last 18-months, Arc & Co. have been consistent in providing structured financing solutions for our clients. Despite more lenders entering the market on a regular basis, we remain true to providing clear and straightforward advice on funding, with the client’s wider strategy in mind.

If you have an opportunity that you would like to discuss, please get in touch with Cameron Hayes at Arc & Co.

Cameron@arcandco.com

07896709177

ARC & CO. COMPLETE €21M SUPER YACHT LOAN WITH AMBER LION PARTNERS

Arc & Co. cements partnership with Multi-Family office Amber Lion Partners with a €21m Yacht loan completion.

The loan was a refinance and capital raise against a 2013, 72 meter Super Yacht. The loan was written over a six year term at a margin of 2.95% over Euribor. The lender was JP Morgan.

Andrew Robinson Says – “This loan was intricate due to the nationality and complexity of the client. It really demonstrated the added value of our partnership with Amber Lion Partners. Loans of this size and complexity rely on trust in the relationship and working with Amber Lion Partners helped bring all parties together to make the deal happen”

Avy Burstin says – “This is the third completion of large structured financing the partnership between Arc & Co. and Amber Lion partners has produced. With in the last couple of weeks, we have completed 2 complex real estate deals and one Super Yacht deal. It demonstrates the power of our joint value proposition to UHNW families, throughout Europe and Emerging Markets. We expect this partnership to grow and accelerate in momentum in 2022, with the opening of offices in various European locations.”

Arc & Co. launch partnership with London Belgravia Brokers

Arc & Co. have partnered with London Belgravia Brokers to form an integrated advisory for independent advice on real estate finance and build warranties.

Combined, Arc & Co. and London Belgravia Brokers provide advice on over £2bn of development costs per year. This partnership will enable both firm’s client base to benefit from specialist advice needed to support their business in the best possible way.

The first deal was completed with West One Loans. The loan of £2.3m was for a development of 9 units in Wood Green.

Deal Specifics

Key stats:

•               Gross loan - £2,295,000

•               Interest - 7% + base

•               Term – 24 months

Specialist advice was needed as the client has no UK assets, affecting the availability of a personal guarantee which would be enforceable in the event of a default. West One specialist underwriting meant that they could assess the strength within the case based on quality of the asset and the delivery team involved.

Andrew Robinson says “This is the first completion from our new partnership and demonstrates the clear specialist advice needed within the ever demanding development finance sector. This completion was a win-win for both firms and the client as without the funding levels approved, the client would not have been able to purchase the site.”

Giles Fallan says “The base of London Belgravia’s business model is providing honest and dependable advice to our clients and this is mirrored in the foundation of our partnership with Arc & Co. This completion is the epitome of this and clearly demonstrates the real value clients can see, from the bringing together of two specialists in their field can bring.”

How Is Current Market Volatility Affecting The Day One Loan Amount?

Written by Matthew Yassin, Director Structured Finance

As the finance world continues its recovery from the shock of recent worldly events, we continue to analyse the effect this is having on developers and the development facilities available to them.

Fundamentally, a development loan consists of a few key components including:  

·        Land Loan 

·        Construction Loan 

·        Interest charges 

·        Professional fees and contingency.  

What factors can affect these? 

1.       Timescale 

It is currently evident that lenders are extending the term on loans to compress the risk associated in delivery. Although a development has the potential to reach practical completion within a shorter timescale, it is prudent to allow some headroom so the scheme is not under pressure. The obvious effect this has is primarily on the interest portion of the loan. By having a longer proposed term the interest is naturally increased which creates more cost. The underlining concern regarding timescales is directly connected to the disturbance in the market such as; Contractor lead times, material shortages, potential labour shortages which are all supply chain issues. Considering the overall uncertainty, the lender must create some slack in the facility – and by the extending the term, it will give more comfort in delivering on time and not breach the loan covenant.  

2.       Material Costs 

The increasing costs of materials has subsequently increased the build costs and therefore the construction facility amount. Due to risk, lenders like to ensure that the construction facility is 100% funded. Consequently, if the construction cost has increased, the impact is on the day one loan amount which inevitably will be reduced. 

3.       Contingency 

Lenders need to ensure that their loans are viable to deliver the project for the developer. Consequently, by the running the numbers in today’s world they prefer an additional layer of protection for both the developer’s scheme and their loan, which is normally centred on the level of contingency. This is the facility that allows cover for any overruns in cost or timescale and other unidentified costs that may occur throughout the development. What we are seeing is this being increased from 5/7.5% - to a comfortable 10% or more in some cases dependant on the scheme. Again, this portion of the loan needs to be factored into the day one costs and consequently it is having a negative effect on the day one loan amount. 

By extending the term on the loan, the rise of material costs and the increased contingency means the residual loan facility is significantly decreased. Below is an example of a £4.5m loan facility:

Previous                                                                              Current

Facility £4.5m                                                                    Facility £4.5m

Land loan £500k (50% LTV)                                          Land Loan £0 (LTV)

Contingency £750k (7.5%)                                            Contingency £900k (10%)

Interest Facility £250k                                                    Interest Facility £300k

Build Cost Facility £3m                                                   Build Cost Facility £3.3m

The direct impact being felt is the reduced land loan as a result of increasing the other elements of the loan. This means that we are increasingly seeing mezzanine and equity finance being required by developers.

With mezzanine and equity finance in higher demand, there has been huge growth within this space. It has become much more common for junior lenders to form part of structuring the debt, supported by positivity in the residential and investment sectors as well as readily available mortgages.

Ultimately day one loans are reduced as a result, but only time will tell if this is a short-term adjustment or if we are entering a new phase in the development world given the events of the past 2 years. It’s fascinating seeing the market adapt to new conditions and we continue to be bullish about the liquidity available throughout the capital stack and new products on the horizon. 

The True Cost of Capital

What is the true cost of capital? When looking at development finance, many borrowers focus on the rate of interest that is applied to the loan, however this is only a small fraction of the total cost of capital and there is much more to consider. It is not always the lowest interest multiple that generates the lowest cost and the most suitable loan.

The first and maybe most obvious consideration is gearing. How much leverage is required? The higher the leverage, the higher the risk. The higher the risk, the higher the price. Once you have worked out how much leverage you require to fund the development, you can then start to look at how to structure the loan in ways that maximise your profit and/or minimise your equity, increasing your return on equity (ROE).

Some borrowers require low leverage and low pricing to maximise their profit margin, but this is equity intensive resulting in a low ROE. In real terms, this approach is very expensive as equity is more costly than debt, both in pricing should you need to raise it, but also in opportunity cost should you already have it, limiting the number of developments that you can construct at any one time.

To minimise the equity required you need to look at maximising the day one land advance, which comes with increased leverage and is the amount contributed by the debt facility once all other delivery costs including interest have been funded. It is not always the loan with the cheapest interest that maximises the day one advance. A borrower needs to understand the in and out fees and how they are apportioned to the loan. For instance, if the interest rate is low but the entry fees are high, this is likely to reduce the day one advance. Some lenders will back end the fees meaning that there is more to pay on the exit of the loan. The lender is taking more risk and therefore this might be reflected in the interest rate charged to the debt.

The delivery programme is just as important as often this is where interest is saved, regardless of the rate at which it is charged. Most construction drawdowns are calculated on an S-Curve basis, meaning you are only paying interest on the amount of debt that is drawdown. Simply put, capital that is not being used is not charged upon. The only way to be accurately assess this is to build a realistic cashflow model and likely drawdown profile to properly analyse debt required and the associated interest coupon. Some borrowers will work on a peak debt basis, further still reducing their cost of borrowing by optimising their drawdown profile. This works well when building houses but is very difficult in residential blocks.

In summary, to accurately calculate and compare the true cost of capital you need to measure it as a percentage the total cost of finance by adding together the entry and exit fees, the interest apportioned to the loan and cashflow divided by the gross loan amount. This percentage can then be measured against ROE and it is often surprising that the loans with the lowest interest rate, aren’t always necessarily the cheapest overall cost of capital. The biggest factor that affects how cost effective a borrower’s capital really is, is ultimately down to the performance of the project, construction, sales and time.

Sophie Brown Joins Arc & Co.

Sophie is Arc & Co.’s representative for Southeast Asia, based in Singapore where she provides debt advisory services with a focus on Real Estate. 

Sophie is a Chartered Accountant and has significant experience in M&A and debt structuring both in house and an advisor for business ranging from private equity-owned, family-owned and FTSE 250. 

Sophie is most proud of ensuring her clients are presented with the optimal deal structure and smooth execution, that is what gives her the most satisfaction.

Andrew Robinson says: “It’s great to be working with Sophie. Her previous experience in M&A and debt structuring will add value to Arc & Co.’s proposition. The Southeast Asian Market has a key influence in the UK and European Real Estate Market across all sectors including residential, commercial, and industrial both for development and investment. As Sophie is based in Singapore, she is well positioned to advise investors from this region with the most up to date market knowledge.”

Sophie Brown says:

“Joining the Arc & Co. team with the experience and reputation within the development and commercial sector across all Real Estate asset classes will add value to our clients in Southeast Asia. I look forward to working with the team and being able to deliver the best possible advice to our clients.”

To connect with Sophie, drop her an email at Sophie@arcandco.com

Welcome to the team Sophie!

Arc & Co. wins Best Development Broker at the Bridging and Commercial awards

Arc & Co Completes £86m development loan

Arc & Co are pleased to announce the completion of an £86m loan facility on a speculative residential development in the Midlands. The funds will be used to acquire the site and repurpose the land from its current tenure.  

Our client, who has multiple sites nationwide, was set a strict deadline to complete the purchase and required a high loan to value. They required a lender who would be able to give them the flexibility required to enhance the value through a number of different strategies. 

The Loan amount of £86m was provided in an initial drawdown of £76m, equating to an 80% Loan to Value, on a 3 year term. The balance will be drawn upon attaining certain planning permissions. 

A US based hedge fund provided the loan facility, with the entire deal taking just 6 weeks from application to drawdown.  This was the first deal Arc & Co have transacted with this global investment firm.  

Sean Adams said 'This was a complicated funding proposition with many moving parts, but to get from application to completion in just over 6 weeks was quite a feat.  This was thanks to a very engaging client and an extremely proactive funder.  We look forward to completing further funding transactions for this client'  

Arc & Co and Octopus complete £12m loan for major development in Isleworth

Arc & Co. has completed a £12m development loan with ME Developments and Octopus Real Estate in Isleworth, London. The development is directly opposite Isleworth Station and the first major residential development in the area for 2 years.

ME Developments has plans to build over 1,000 houses and apartments with a value of over £400m over the next three years.

Deal Outline:

•               Loan size £12m

•               GDV of £25m

•               Lender Octopus Real Estate (development team)

•               Asset Two mixed-use towers comprising 53 apartments and 7,000 sq.ft. of offices

•               Type of finance Development facility (loan)

•               structural warranty sourced by London Belgravia Brokers

•               LTGDV 67%

•               LTC 83%

Deal Complexity

A golden brick payment was payable on the affordable housing, which ME Developments has to exchange on prior to completion. The affordable housing sale has been agreed with L&Q. Octopus Real Estate were excellent in adapting when necessary to meet completion deadlines.

Due to the scheme’s healthy profitability, Arc & Co. were able to structure a high loan to cost facility while maintaining a competitive financing cost.

ME Developments has plans to expand across the Home Counties and outskirts of London, benefitting from a buoyant residential property market. This market activity has increased the availability of innovative funding available from institutions and international investors who recognise the opportunity in the UK's residential property sector.

ME Developments have recently appointed an advisory board with HE Shaukat Aziz (Ex Global CEO Of Private Banking Citi Bank And Former Prime Minister Of Pakistan) And Lord Norman Lamont (Former Chancellor Of The Exchequer UK) with Bashir Ahmad, CEO of Halkin Investments, as Non-Executive Chairman of ME Developments.

Cameron Hayes, Asset Finance Advisor at Arc & Co. says, “It was excellent to work with both ME Developments and Octopus Real Estate on completing this loan, which will be the first stage in achieving ME Development’s growth plan.”

Simon Marshall, Founder and CEO at ME Developments says, “It was a pleasure working with Arc & Co. and Octopus Real Estate on this complex transaction, in order to help us achieve our 1,000 homes in 36 months target. Arc & Co.’s best in class financial advice, coupled with the fire power of Octopus Real Estate has been vital to achieving this.”

London Belgravia Brokers (LBB) was introduced to ME Developments by Arc & Co in order to arrange structural warranty cover for the 53 unit scheme in Isleworth, with a total GDV of £25m.

Senior Broker & Head of Desk, Jamie Milne, was able to provide comprehensive and independent insight about the market and the availability of products most suitable for the project. Jamie also navigated through the added layer of complexities and mandates, as stipulated by the housing association.

In addition, London Belgravia secured exclusive payment terms which allowed ME Developments to secure their warranty with just 20% down payment and remaining premium spread over the 10 month build period.

Jamie further commented:“We are delighted to support ME Developments on this new scheme, which will create much needed modern homes in the south east of the country. We have been very impressed by their projects in the past and are pleased to be assisting them in delivering their impressive pipeline of projects”