SUSTAINABILITY UPGRADES: WHO IS GOING TO PAY?

A little thought experiment for you: if you had to completely upgrade your home’s energy performance – and face steep fines if you didn’t – would you be confident of finding the cash?

And what if you couldn’t? Re-mortgaging is an option, but only if there was enough equity in the property to borrow more. Maybe a wealthy friend could provide the capital, in return for part ownership of your home of course. But what is the outlay was more than the value of the asset?

A classic Catch-22. It doesn’t make economic sense to spend on the upgrade, but selling the asset would mean a huge discount to current values. You either sell at a big loss or hold an asset that actively costs you money through fines. Hobson’s Choice.

To bring our thought experiment into the real world, this is the situation many commercial investors are currently grappling with, and solutions are in short supply. MEES regulations mean that by 2030 all non-domestic properties must have an EPC rating of ‘B’ or higher; by some estimates, as much as 88% of assets will need some form of upgrade to become compliant. For properties that aren’t upgraded, but continue to be leased to occupiers, fines start at 10% of the property’s rateable value, rising to 20% after three months with an upper limit of £150,000. The urgent need to upgrade is clear, but poses a rather large question: who exactly is going to pay for all this?

Flight to quality

The answer is not a simple one, and in truth it varies hugely depending on each asset’s specific circumstances. But when weighing up a building’s prospects there is a clear distinction to be made between high-quality holdings and those that are at the lower end of the spectrum.

Let’s start at the top end of the market, if only because it’s a little easier to foresee what will happen. In broad terms the best assets – in strong locations with high occupier demand, and usually owned by well-capitalised funds and institutions – will face very few hurdles. Not only will upgrade costs be generally lower as a proportion of overall value, but such works could potentially even have a net positive effect on values. With corporate occupiers willing to pay a premium for sustainable space, and MEES regulations likely to trim supply at the margins, we can expect a fillip to top-end rents and values.

Given these dynamics, finding the cash to upgrade these assets will be relatively straightforward. In many cases the investor will have the money available to fund the necessary works. If needed, loans in this space will be easy to come by – we’re already seeing both banks and alternative lenders expand their offer, with products operating in a similar way to development finance facilities.

At the margins, there will be some assets – on the fringe of the best locations, older and therefore more expensive to bring up to scratch – that require a different solution, and private equity will step in for some of the heavy lifting. A number of major PE funds are manoeuvring to capitalise on this need, with teams identifying the investors that are short of cash but have assets where upgrades make sense. Globally, private equity has $500 billion of ‘dry powder’ in its warchest – expect to see a decent slice of that deployed in upgrading buildings in return for stakes in the assets.

The sums don’t work

Towards the lower tiers of asset quality, the picture is a far more complicated one. Even before availability of cash is taken into account, it is much harder to make the sums add up. These buildings will often be older – needing more spent on them to bring them up to scratch – while at the same time will be worth less than equivalent higher-quality assets. In parallel, these buildings are less likely to see the uplift in rents and values that prime stock will experience; the best many could hope for is for current values to be maintained. The ratio of required spend to asset value is squeezed from both directions, and in many cases it will simply not make sense to undertake the upgrades.

Then there is the question of available capital to complete the works. Owners of lower-grade assets are often far smaller and with a great deal less cash on hand. Many will be owned by individuals and families whose wealth is tied up in other assets, including their own homes. Unlike the institutions, laying hands on the necessary cash to fund the works will be at best tricky and in many situations impossible.

The dynamics effectively rule out borrowing – lenders will have neither the capacity nor appetite to engage with this end of the market – and the doors to private equity funds will be similarly closed. There is, in short, a lot of work that needs to be done, and not enough cash to go around.

The luckier owners will be able to redevelop sites for alternative uses, or sell them to people that can. Others will be stuck with essentially worthless assets. The Government may review the regulations timetable, but this will surely amount to a stay of execution rather than a resolution. One thing is clear: some difficult decisions lie ahead.

This piece was initially published in the May 2023 edition of Business Moneyfacts Magazine.

ARC & CO ARRANGES £14m QIB RESIDENTIAL INVESTMENT FACILITY

Arc & Co. has arranged a new £14 million facility with Qatar Islamic Bank (QIB) for the investment acquisition of 90 residential units in London.

With the properties recently completed the interest-only facility, which has been arranged on a five-year term, will be used to acquire and fully let the asset. With no early repayment charges, it provides the client with complete flexibility, removing the requirement to lock in for five years at fixed rate pricing, especially at a time when then SONIA benchmark was at its peak.

Arc & Co. expects residential PRS and build-to-rent to continue being 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, at an attractive price point is in high demand, with more BTL investors being pushed out of the market with rising interest rates.

Cameron Hayes, asset finance adviser at Arc & Co., said: “The fundamental strengths of the residential market remains an attractive focus for lenders. It is a sector that requires specialist understanding, in particular around valuations, with net initial yields still being attractive for investors who can capitalise on buying assets vacant at practical completion and stabilising income. The facility is an ideal solution, meeting the strategic aim for the client and avoiding the requirement to hedge, in an environment where interest rates are poised to reduce, given recent market uncertainty”.

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.

ARC & CO ARRANGES £5.65m SURREY RESI DEVELOPMENT FACILITY

Specialist debt advisor Arc & Co. has arranged a new £5.65 million development loan from West One to finance the completion of a 29-unit residential scheme in Surrey.

The facility enables construction work on the part-built residential scheme to be completed, and refinances a loan from a third party development lender. It was taken out at a loan-to-GDV of 65% over an 18-month term by a private client of Arc & Co.

The deal was finalised within a tight schedule, with agreement of terms just one month after the first enquiry. Due diligence was expedited by reassignment of previous valuation and project monitoring surveyor reports.

Tom Berry, asset finance advisor at Arc & Co., said: “The speed with which we were able to work with the client and West One to finalise this facility highlights the benefits of mutual trust between all parties. Utilising existing valuation and PMS reports helped to process the case quickly. Situations such as this – refinancing a part-completed development project – bring with them their own quirks to overcome, and as such it is hugely pleasing to have reached a solution that works for everyone. We look forward to working with both the client and West One on future projects.”

Alan Coleman, portfolio manager at West One said: “Being able to get this facility in place within 28 days of Tom sending me the enquiry and 22 days from the application being received is testament to the relationship which we have built with Arc & Co. over the years. Trust and confidence that a lender is able to get loans underwritten and completed quickly, regardless of complexity, is now more important than ever. We will continue to support our broker partners and their clients as we have supported Arc & Co. and this client.”

The Arc & Co. Group is a specialist asset finance advisory company based in St James’s, 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.

ARC & CO ARRANGES £3.5m CAMBRIDGE RESI DEVELOPMENT LOAN

Specialist debt advisor Arc & Co. has arranged a new £3.49 million development finance facility with Hampshire Trust Bank for the construction of three houses within the city by a private client.

The loan has been taken on a 24-month term at a loan-to-GDV ratio of 65% and an interest margin of 5%. The facility will fund the development of three houses, which each will have individual sales values of between £1.5 million and £2 million.

Tom Berry, asset finance advisor at Arc & Co., said: “The demand for high-quality housing in Cambridge makes this an attractive scheme for lenders, but it is still crucial to find a partnership that works for everyone. Hampshire Trust Bank is renowned for its understanding of projects such as this, and the client has a proven track record of delivery. We look forward to working with them both on future developments.”

Alex Upton, managing director, development & bridging finance at Hampshire Trust Bank, added: “Property lending requires everyone involved in the project to work together as a team to achieve the same goal, no matter how complex. Arc & Co continues to show dedication in ensuring that the requirements of lenders and developers are met, and that this can be replicated on future developments for great clients such as this.”

The Arc & Co. Group is a specialist asset finance advisory company based in St James’s, 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.

ARC & CO ARRANGES £6m ARBUTHNOT LATHAM MORTGAGE FOR UHNWI

Specialist debt advisor Arc & Co. has arranged a new £6 million mortgage from Arbuthnot Latham on behalf of an ultra high new worth (UHNW) individual, with the new loan agreed within just three weeks.

Arrangement of the interest-only mortgage, which has been taken out against the individual’s £10.5 million primary UK residence in North London, was expedited to meet a tight schedule, with Arbuthnot Latham able to utilise previously-conducted searches to underwrite the loan. It was priced at a margin of 2.4% over base rate for a five-year term.

Andrew Robinson, CEO of Arc & Co., said: “Completing a fully-regulated loan of this scale within just three weeks is almost unheard of, with the mortgage finalised over the sort of timescale more usually associated with bridging finance. It was great to work with Arbuthnot Latham, whose nimble approach allowed the facility to be agreed within such a tight schedule.”

Jay Chavda, regulated mortgage and lending advisor at Arbuthnot Latham, added: “Agreeing a mortgage to a tight deadline is entirely dependent on genuine understanding of the asset, the market and absolute trust between all parties. We have a longstanding relationship with both Arc & Co., which enabled the swift closing of the deal, and we look forward to working with them on future opportunities.

Tom Blackmore, senior private banker at Arbuthnot Latham, added: “We always work with clients to approve deals as quickly as possible. Thanks to our excellent working relationship with Arc & Co. and their speed in providing the information we needed, we were able to complete on the deal in just three weeks.”

The Arc & Co. Group is a specialist asset finance advisory company based in St James’s, 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.

ARC & CO ARRANGES £6.85m TOPLAND RESIDENTIAL BRIDGING LOAN

Specialist debt advisory Arc & Co. has arranged a new £6.85 million bringing loan with Topland Group for the refinancing of a portfolio of nine residential, units in Hull and the acquisition of a further 39 properties in the same building by a private client.

The loan has been arranged on a nine-month term, with low early repayment charges, at a new loan-to-value ratio of 64% and a pricing margin of 5.5%.

The bridging finance solution was reached following the pre-Christmas withdrawal from the market of a number of buy-to-let lenders due to temporary uncertainty. With the client looking to refinance nine units and acquire additional properties, the best approach was to do so through bridging finance for a short period before looking to access a more orthodox long-term facility when the lending market stabilises.

Recent uncertainty has seen buy-to-let lenders impose stricter stress testing and increased ICR covenants across the board, reducing the leverage traditional providers are happy to provide. It is anticipated that a period of certainty in the market will see those conditions relaxed slightly in the coming months.

Tom Savill, asset finance adviser at Arc & Co., said: “The changes in the buy-to-let lending market made this a challenging refinancing and acquisition process, but by working with the client we identified the best solution for this situation. Bridging finance – especially on the terms provided by Topland, with low early repayment charges – offered an approach that meant the client could achieve its aims while providing the flexibility to take advantage of more preferential long-term finance as and when the market allows.”

Anish Vora, structured finance manager at Topland Group, added: “We are delighted to provide another competitive funding solution to an existing client. Our structured finance team can fund across the capital stack and look forward to supporting real estate investors and developers in 2023. Thank you to Arc & Co., Knight Frank and Osborne Clarke for their support on this transaction.”

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.

ARC & CO STRENGTHENS TEAM WITH TWO HIRES

Edward Dickinson joins as private client advisor, Perry Beckett as advisor

Arc & Co. has further strengthened its market-leading asset finance advisory capabilities with two appointments to its team.

Edward Dickinson joins as a private client advisor, with extensive experience of property finance and mortgage advisory for high net worth individuals. In his new role, Edward will be working alongside CEO Andrew Robinson, chairman James Fleming and regional chairman Paul Davies.

Edward’s arrivals strengthens private client capabilities that are already unrivalled in the sector. James Fleming was formerly head of international banking at Coutts & Co., chief executive of Arbuthnot Latham and most recently chief executive of multi-family investment office Sandaire. Paul Davies has more than 40 years’ experience, including 15 years based in Singapore as vice chairman of Coutts, Southeast Asia.

In addition, Perry Beckett joins as an advisor, focused on commercial and development transactions. Perry arrives having graduated from Milan’s Università Bocconi with a BSc in international economics and finance, followed by a Masters in management and finance from IE Business School in Madrid.

Based in Mayfair, London, The Arc & Co. Group is a specialist asset finance advisory company. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, mortgages and leasing.

Andrew Robinson, CEO of Arc & Co., said: “We are always looking at ways to strengthen Arc & Co. and as such it is pleasing to welcome someone with the private client understanding and experience that Edward will bring to the role. Similarly, Perry’s arrival demonstrates our commitment to attracting the very best new talent, and we all look forward to mentoring him as his market expertise grows. This promises to be a hugely exciting year for Arc & Co.”

THE EXPECTED RETURN OF STABILITY

After a volatile period, 2023 brings the prospect of greater stability – and with it a development finance market that can act with increasing confidence.

Matthew Yassin

Director of specialist debt advisory

Predictions are always something of a hostage to fortune, especially in a sector as exposed to shifting realities as development finance. But as we look ahead to what 2023 has in store, there are reasons to be optimistic that a period of greater stability will give the market stronger foundations to work from.

The volatility of recent years has hit the development sector in three major ways. Firstly, the pandemic, and to a lesser extent Brexit, caused manifold supply chain issues, creating material shortages and increasing lead times. This then provoked huge rises in the prices of both material and labour, something that was stoked by the energy crisis. Finally, belated efforts to crush inflation have seen interest rates rise sharply, with further increases anticipated.

However, absent any new ‘black swan’ events, the pressures in these areas are starting to subside. A combination of receding energy prices and base effects should see inflation return to a far more manageable level as the year goes on. This is turn will impact on the trajectory of interest rates, which are now anticipated to peak at a lower level than previously feared. In parallel, supply chains are recovering from recent shocks, reducing lead times, increasing availability and having a further deflationary effect.

While the cost of money, materials and labour will settle above pre-pandemic levels, the equilibrium they will reach offers an opportunity for green shoots after a period of significant volatility. A more stable environment will encourage development and allow lenders to act with increasing confidence.

This new equilibrium will of course have some victims. Higher costs will put downward pressure on land prices, with landowners facing a period of realisation about new market values. Similarly, development viability will be hit and schemes at the margins will find it difficult to progress; many projects will face compressed GDV and equity injections if they are to continue. But the payoff will be a more realistic, streamlined market with the solid foundations to encourage transactions. As ever, it is the best assets that will most easily navigate the new normal.

In this environment, good finance and debt advisory will be key. Lenders should be applauded for the support they have given the market during recent uncertainty, but they can only do so much. As things settle, there will be greater clarity around what products are in the market, and accessing the right financing mix – be it equity, senior debt, development funding or bridging loans – will be key to success of any project.

Wishing you all a happy, prosperous – and stable – 2023.

This article first appeared in the February 2023 edition of Business Moneyfacts - you download the full magazine here.

ARC & CO STRUCTURES £18m OF BTR DEVELOPMENT LOANS

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.

NACFB launches Certificate in Commercial Finance Broking (CertCFB)

The NACFB Broker Academy is the communal industry response to calls for a standardised educational platform, one that provides the foundations for an environment of greater understanding and higher rates of transactional success. Students will be recognised with a nationally recognised, Level 3 qualification called the NACFB Certificate in Commercial Finance Broking (CertCFB). The Academy has already received endorsement from both UK Finance and the British Business Bank.

Reflecting on both the quality of the course and his learning journey so far, Thomas Berry, asset finance advisor at Arc & Co. said: “I thought the first session was insightful and well organised. I appreciated the opportunity to interact with the other delegates by breaking off into group activities. I’m looking forward to progressing over the next year.”

Andrew Robinson says, “It’s great to see that the NACFB have managed to structure a qualification that that supports education within the commercial finance broking community at a national level. We hope to see this qualification grow which will raise the advice standards of the whole industry.”

Arc & Co and Waypark Capital complete a £10.2m commercial investment term facility for the refinance of two serviced offices

Philip Kay, Senior Asset Finance Advisor at Arc & Co. has completed a £10.2m commercial investment facility for the refinance of two regional serviced office assets. The 5-year senior investment loan is being provided by Waypark Capital at a 71% LTV on a variable interest rate. The proceeds of the loan were used to refinance two acquisition bridge facilities which the client had drawn to acquire the properties earlier in 2022.

The loan was credit approved prior to the rapid interest rate increases in September and October. The loan was agreed at 71% LTV against investment value not vacant possession. Given that the lender funds on a variable basis, the recent market volatility would normally have required a reduction in LTV, however in this instance, Waypark Capital were able to structure the loan repayment profile to mitigate the possibility of higher funding costs in the market and maintain the high LTV for the benefit of the client. This was due to the excess cashflow from the lease which created stability against the volatility of increased interest rates.   

Philip Kay said “I’m delighted to have closed this transaction in the current market and would like to thank Waypark Capital for their flexibility and speed in structuring this loan. They were able to look beyond the market turbulence of the last couple of months and are truly a ‘through the cycle’ lender. I look forward to working with them again.”

Nicolas Vocos, CEO of Waypark Capital said "The team worked with Arc & Co. and the client to structure the right funding solution to their requirements. We are pleased to have delivered this loan and provided the certainty of execution needed during these very uncertain times.”

Arc & Co. secures a £1.1m commercial loan from Redwood Bank for the refinancing of a serviced office building near Guildford

Julian King, Director within the structured finance team at Arc & Co. has secured a £1.1m commercial loan for his client, an architect who owns and occupies a serviced office building close to Guildford. There were a number of constraints in completing the facility in order to refinance the outgoing lender, including short 12 month licences on a multi tenanted building together with a business plan effected by the pandemic.

 Julian King added “It was a pleasure working with my client who’s existing finance term with his existing lender had come to an end. Upon expecting the building it was clear that it was well managed and provided a quality bespoke office space to its occupiers in a well serviced location with low attrition rates. Working With Redwood Bank was a straight forward refreshing experience due to the knowledge of the credit underwriting team and the productivity of the business development team lead by Nicola Blake. This ensured that collectively we structured the right solution for the client and their project”.

The £1.1m commercial loan was provided by Redwood Bank, to aid with the refinance of the outgoing lender and to provide CAPEX in renewable energy investment to further enhance the attraction of the building, whilst future proofing its offering to its tenants. The loan was provided for a period of 5 years at a margin of 4.95% p.a at a 60% LTV.

Nicola Blake, Business Development Manager at Redwood Bank said “Working with Julian King from Arc & Co was a great experience, from day one we discussed the client’s needs and worked collaboratively, both visiting the property and clients to gain a better understanding on how the large office block is operated to ensure a smooth approval at Credit stage. Julian’s property knowledge, his professionalism and regular engagement between Redwood, the customer and legal teams, working closely to overcome any hurdles ensured completion within a short timescale.”

Redwood Bank were advised by Freeths LLP with the client being advised by Lynn Murray & Co, both of whom did an excellent job in getting the loan completed before the client incurred additional costs under their outgoing facility.

Arc & Co. and Alpha Property Lending complete £7m bridge to sell secured against one of London’s market leading sustainable developments

Alpha Property Lending has completed a £7m development exit loan for a newly completed development of 8 houses and 2 apartments in East London.

Alpha Property Lending provided a fixed rate loan, giving the Borrower certainty in a volatile interest rate market.

The loan was used to repay development finance and will enable the developer time to sell the properties. One of the properties had exchanged pre-funding and three others were under offer.

Edward Horn-Smith, Managing Director at Arc & Co. says,

“Arc & Co were instructed by an existing client to source competitively priced fixed rate debt. After a short tender process we identified Alpha Property Lending as the best funding partner. From instruction they were quick, professional and transparent.”

Mert Zabci, Lending Director at Alpha Property Lending says,

“Alpha Property Lending are pleased to have worked with Arc & Co as well as a Borrower which has a clear focus on ESG, having built carbon negative residential units with intricate design and sustainability considerations. This is our first completion with this Borrower and future schemes are already under discussion.”  

Arc & Co. Completes £7.5m loan with Shawbrook Bank

Gareth Briggs, Head of Mortgages at Arc & Co. has completed a £7.5m loan on a portfolio of 27 properties with Shawbrook Bank.

The portfolio consisted of a mix of residential and commercial properties in the East Midlands, with some owner occupied. Arc & Co. worked closely with Shawbrook throughout the transactions to work through complications, and concerns with the sustainability of the commercial units income.

Shawbrook Bank enabled a quick completion from offer to completion in 5 business days across a combination of refurbishment bridges, a residential portfolio and commercial portfolio.

Gareth Briggs says “This was a challenging deal to structure due to the mix of the portfolio, but Shawbrook were excellent at understanding the assets in order to complete on this deal.”

ARC & CO. COMPLETES £4M DEVELOPMENT LOAN WITH HAMPSHIRE TRUST BANK

Arc & Co. have completed a £4m development loan with Hampshire Trust Bank for a ground up development of 10 houses in Newmarket. The facility is for a term of 18 months with a LTGV of 65% for a Cambridge based developer.

Tom Berry, Asset Finance Adviser at Arc & Co. says, ”Considering the volatile market and the increasing cost of debt, Hampshire Trust Bank priced the deal fairly, maintaining the leverage in spite of a rapidly changing market. It was a pleasure working with the team at  Hampshire Trust Bank on this case, who were efficient and clear from start to finish.”

Alex Upton, Managing Director, Development Finance at Hampshire Trust Bank says “At the beginning of the year we, at HTB Development Finance, realigned our distribution to better face into and support the broker community and the partnership that is developing with Arc & Co shows exactly why we have done that. Tom has been there at every step of this transaction adding value, insight and solutions to ensure we progressed to a smooth completion.”

Arc & Co. win at the NACFB Commercial Broker Awards 2022

Arc & Co. are delighted to announce winning two awards at the NACFB Commercial Broker Awards 2022.

🏆 Development Broker of the Year, sponsored by @LendInvest

🏆 Commercial Mortgage Broker of the Year, sponsored by Lloyds Bank

Andrew Robinson, CEO of Arc & Co. said: “it’s an absolute privilege to have won these awards. It reflects the effort, professionalism and hard work of the team over the past 12 months and we hope to be back next year with another strong submission”

ARC & CO. COMPLETES A £8.5M BRIDGING LOAN WITH LENDINVEST

Tom Savill, Asset Finance Adviser at Arc & Co. has completed a bridging loan with Lendinvest for £8.5m. The loan has a 12-month term with a 65% loan to value.

The property, located in Eastbourne, was a vacant prep school originally purchased without planning. The client obtained change of use and planning for 52 residential apartments and the facility allowed the client to refinance after obtaining planning permission to release equity. The exit plan for the loan is to sell the site to a developer.

The deal had several challenges as the school was owned by multiple shareholders and required a guarantee from a director that wasn’t a shareholder. This coupled with the original planning use made the deal complicated and Lendinvest’s ability to understand this was vital in completing the deal.

Tom Savill Says, “It was great working with Lendinvest on this deal. They were very competent, understanding the complex nature of the asset as well as the ownership structure. I look forward to working with them again in the future.”

Gary Clark, Business Development Manager at Leninvest says, “This deal had some unique points to it. With the input and support from Tom, we were able to quickly deal with any issues in a timely manner. I would like to thank Tom for his professionalism and support, aiding us to complete this deal in the timescales required.”

Arc & Co. completes loan on 43m yacht

Nikita Nigai from Arc & Co. has completed loan on a yacht with an Asian leasing institution on behalf of a Middle Eastern national.

Equity release of EUR 3.9M was secured against the 43m Superyacht for a 5-year term with a 30% balloon payment without AUM requirements. The case involves a complex legal structure due to several legal parties in four different countries. The loan size and the age of the yacht narrowed the available lending options, specifically with no assets under management.

Nikita Nigai, Head of CIS at Arc & Co. says, “This was a challenging deal to structure due to the complex legal structure, lack of AUM and the reduced lending options available, but I am very pleased to have been able to find a solution for our client.”

Arc & Co. secures £3.5m residential developer exit bridge

Julian King, Director within the structured finance team at Arc & Co. has secured a £3.5m residential developer exit bridge with Century Capital for his client, a Surrey based developer to refinance an existing development facility.

The new facility provided a loan of 70% LTV for 9 months, allowing for an extended period in which to sell the asset, protecting its underlying value. Due to pressures from lack of labour, rising costs and supply chain issues lengthening the build program, the development loan had come to term without a suitable sales period.

The solution was to refinance, supporting the developer to obtain the true value of the specialised asset, a beautifully restored and modernised Surrey mansion sat in 6 acres of mature parkland surroundings.

Julian King added “It was a privilege to be involved in the development of such an asset and to work with my client who had a clear vision from inception 2 years ago. I’m looking forward to seeing who purchases the property and to seeing it sold successfully, providing an unrivalled home, beautifully reinstated to the highest of standards. This is a great example of how well an exit facility can work, allowing for time in which to realise the true value of assets and protect against the erosion of value. Something that I think we will see more developers turning to in the months ahead.”

MFS and Arc & Co. complete £2m buy to let mortgage for landlord with multiple BTL strategies

Market Financial Solutions (MFS) and Arc & Co. have delivered a £2 million buy-to-let mortgage to a client needing help with multiple buy-to-let (BTL) investments.

The borrower presented several challenges. They were refinancing their existing portfolio, which fell under a mix of private companies and personal names – the goal was to bring their portfolio together into one limited company, and then raise capital for new acquisitions.

The portfolio consisted of ten BTL properties including houses in rural areas, towns and cities. Arc & Co. worked with the client to create a strategy to present the case to MFS’s underwriters which illustrated how the funds would be utilised. MFS’s strength in their underwriting was their ability to understand the diversity within the assets and use of funds which included obtaining planning permission, furnishing and legal costs.

MFS saw that there were multiple exit strategies available to the borrower given the breadth of their BTL portfolio. Further, by running multiple affordability calculations, they noted there was plenty of potential for the properties on the horizon.

Given these factors, along with the fact that most of the properties already had tenants, a loan of over £2m was promptly issued at an LTV of circa 70%.

Imogen Williams, Regional Sales Manager at MFS, commented: “At MFS, we pride ourselves on cases like these, which present plenty of interesting and unique challenges. Here, we were simultaneously consolidating an existing portfolio under one private company as well as financing the acquisition of ten new BTL properties.

“We had to act quickly and have completely open lines of communication with the broker and borrowers. By doing so, we were able to establish all the facts involved, overcome the complexities of the case, and deliver a product that met the exact needs of the borrowers. It’s a great showcase for MFS’s qualities.”

Rupert Child, Senior Consultant at Arc & Co. commented: “I am very pleased to have completed this loan with MFS which had so many layers of complexity, numerous moving parts and timing conditions. Jemma is absolutely brilliant - keeping me updated and seeing the process through to conclusion.“

Paresh Raja, CEO of MFS, added: “Many lenders would have struggled with the numerous complexities of this case, but MFS, with its 16 years’ experience as a specialist lender, was able to overcome all the challenges, and quickly. Imogen and the underwriter, Jemma, handled the case superbly from start to finish.”