Success Breeds Success

After completing a deal for a client we were grateful to receive an introduction to one of their friends, a real endorsement of having done a good job previously. 

The new borrower needed finance to permit the refurbishment of a residential property that had suffered fire damage. As a professional landlord, borrowing in his sole name, the borrower had built a high yielding portfolio of residential investment properties so location and asset quality were a challenge for most lenders. 

Securing competitively priced finance was difficult and the lenders the borrower had approached were unwilling to lend to the asset in its current condition. Being able to help clients add value to properties by securing flexible finance is something we enjoy. 

The buy to let landlord had bought the property cash at auction and quickly needed finance to ensure the property became revenue generative quickly. Within a week of being engaged we had credit backed terms for the loan and had progressed to valuation stage. 

We completed a whole of market search and recommended a ‘new to Scotland lender’ who were able to quickly grasp the transaction. We were able to prove the lenders appetite for this transaction by cross checking with heads of terms from another recent completion with this lender. By negotiating hard for the borrower we managed to secure an interest rate and arrangement fee much better than the market rate quoted by this lender. This reduction in cost more than covered our fee. 

Brokering the transaction at Conduit Finance, Edward Page said; “It was a pleasure to assist this client and advise on the best funding option.  I worked closely with the client to drive the process forward and arrange all supporting documentation, the valuation and legals. All parties were delighted to complete the process quickly to ensure the client was on site promptly.” 

We have been engaged to source and deliver the long term buy to let finance which, with interest rates an all-time low, will be on competitive terms.

Conduit Finance is from the outset, focused on providing a clear process, transparency of information flow and fees charged which leads to reduced deliverability risk and high levels of borrower satisfaction. 

Get in touch with a member of the team to access the best cost of finance from new and established lenders:

Jamie Davidson | Loans over £10m and restructuring | Jamie@ConduitFinance.com
Andy Lawson | Loans over £1m | Andy.Lawson@ConduitFinance.com
Edward Page | Loans under £1m | Edward@ConduitFinance.com 
Sean Crombie | Business Development | Sean@ConduitFinance.com
Mark Reidy | Business Development | Mark@ConduitFinance.com

24hr Fund Raise for Unique Site, in Hugely Competitive Locale

Photo by caviarliu/iStock / Getty Images

Picture the scene, an existing client retained our services to provide a fast (sub 24 hours) bridging facility to enable the acquisition of an existing property and adjoining plot of land in the ‘city of dreaming spires’.  The opportunity being a short 15 minute walk from Oxford University.

We dropped everything to achieve Lender Heads of Terms in under 24 hours from the initial enquiry.  

It was a delight to be able to provide robust evidence of funds to enable our client to negotiate the final price (£900,000) and timeline with the vendor, secure the land, and allow legals to commence.  

The borrower, a very reliable and well established developer, did not want to miss out on such an opportunity given the location.  They were able to ring-fence cash for the deposit, and the percentage gearing gave a good selection of what the market had to offer.  The pressure was one of time and any failings on our part meant the loss of the opportunity, the forecast £1m profit which goes with it, and I expect, the client’s future business.  

We knew the lender who would support the bridging facility almost immediately, so we began a program of works with a tireless effort that saw us build the submission and supporting documentation into the evening, allowing us to present Lender Heads of Terms to our client the following morning.

The facility agreed was net £683,000 which would be required for a minimum period of 3 months with interest chargeable at 0.95% per month.

After delivery of the Lender Heads of Terms and the client securing the property/land, we were able to widen our search and research to bring down the interest cost and fees associated with the facility.   This was achieved by putting in place a development finance facility ‘day one’, so that the client did not have to use a bridging loan and therefore the additional set up fees and higher interest associated with this originally sourced ‘interim’ product.

If you or your clients require quick action from a committed, reliable and well connected team then we may be what you are looking for.  We are client side, and act at pace to put in place the funding you need, when you need it.  

Get in touch and run your scenario past us today.

Mark Reidy
Business Development Director
Mark@ConduitFinance.com
T 0131 564 0275
M 07775 678 087

The Seven Day Bridge

Having been referred to us by a previous client, we were engaged by our client to raise funds against an unencumbered property within extremely tight time scales.  The money was required to complete a purchase on a premium London off-plan apartment, within the agreed purchase date.  Unfortunately our client was unable to unwind existing investments as quick as was hoped, and turned to us to find a viable and deliverable solution to plug this funding gap.

Taking into account the prime location and nature of our client’s other properties, we decided to use a new to market family office we had met a week earlier.  The requirement for funds was needed within 10 working days, and we knew this would be deliverable given the lenders unique structure and their ability to make decisions and to deliver quickly.  

Having raised funds across two unencumbered properties, our client was able to complete the purchase on time with no further cash required.

By constantly scoping the market for new lenders, we were able to quickly make a decision on the most viable route given this specific requirement.  The £1,000,000 fund raise was met within the client’s tight timescales using a previously unknown lender.  The greatly reduced timescales were deliverable due to the lenders tight company structure, taking only seven days from heads of terms to final drawdown.  

Sean Crombie commented that “The ability to constantly refresh which lenders we have access to allows us a unique perspective on what is deliverable.  We are always striving to be at the forefront of the property finance industry.”
    
Having delivered the funds required within the desired timescales, our client was extremely happy with not only the solution delivered, but our transparency from the very beginning of the process on what could be achieved, and the likely costs involved.  

As a company we pride ourselves on a no surprises ethos, which ensures clarity as well as deliverability.    

Should you have a time pressured requirement for funding, do not hesitate to get in touch with a member of the team.

Jamie Davidson | Loans over £10m and restructuring | Jamie@ConduitFinance.com

Andy Lawson | Loans over £1m | Andy.Lawson@ConduitFinance.com

Edward Page | Loans under £1m | Edward@ConduitFinance.com 

Sean Crombie | Business Development | Sean@ConduitFinance.com

Mark Reidy | Business Development | Mark@ConduitFinance.com

Meet the Team - Sean Crombie

Sean joined Conduit Finance in September 2015 as a Business Development Manager, working closely with our Business Development Director, Mark Reidy, and our Managing Director Jamie Davidson.

He started his career as a professional rugby player aged 19, and studied Business & Economics at the same time.  During his rugby career he played for Aberdeen Grammar, Border Reivers, Edinburgh Rugby and Newcastle Falcons.

He currently plays for Boroughmuir RFC in Edinburgh. 

Sean has worked on building and strengthening our external relationships with both clients and lenders. On a day to day basis he works with developers and landlords across the UK, helping them efficiently acquire and develop residential and commercial properties. 

The completion of a £1.1m property bridge in London in 7 days stands out as a recent success. It was the speed of the completion that was impressive, considering the lender was new to market.  They also didn't require a valuation which helped save time. 

Other recent successes include the debt forgiveness restructuring of an office investment away from Cerberus, and the funding of a residential development project at a 2.5% margin. 

Sean works closely with our research team to quickly release the specifics of any new to market lenders.  He is currently helping borrowers secure competitive stretched senior development funding at high LTC's, and flexible bridging finance from 0.60% pm. 

He is also working with a number of clients who have had their loans sold on to Cerberus, CarVal, Kennedy Wilson and Lone Star. These loans can be quickly and efficiently refinanced away from the loan managers, who are invariably Pepper/Engage Commercial. 

Restructuring is a specialist service Sean and the wider team can provide.

If you require live pricing or want to hear who the new to market lenders are, then please call Sean on 0131 564 0172, or email Sean@ConduitFinance.com 

£6m Solvent Restructuring Protects Family Leisure Business.

In mid-January we were contacted by a business owner who was under pressure, he had been referred to us by a surveyor. 

After many months of negotiations he had agreed terms to exit the Global Restructuring Group (GRG), of the Royal Bank of Scotland (RBS).  Transactions of this nature are time pressured, and if the finance isn't delivered then an enforced sale, administration or liquidation awaits.

During the first call I was able to reassure the client with a high degree of confidence that we could deliver the finance and protect his business, as we had recently delivered a number of similar transactions.  The experience my colleague Andy Lawson and I gathered whilst working in SME and Property banking also helped us structure and deliver a bespoke solution, which enabled us to solve the various issues.

The primary problem was that the funder he had terms from had pulled out, owing to a basic error in their valuation assumptions.  The new lender wanted to lend off a 90-day assumption, which resulted in a far lower loan than if they were lending off a full open market valuation figure.  The deal didn't work for the borrower, as it left him short of what was needed to settle the current loan and allow the business working capital to breathe.

We work with lenders who use this 90-day assumption, but it can be difficult to get the loan needed to match the loan offered, owing to the variable nature of the net loan sum versus the actual open market value.  On this topic we always advocate engaging with surveyors earlier in the process than normal, to de-risk the valuation figures and to avoid last minute surprises.

The security in question consisted of a lucrative land site with planning consent for new houses, and a trading business in the leisure sector.  The land had a simple valuation metric based on a value per plot, and a net land value after a work back from a gross development value.  The leisure business was profitable, but was taken on a vacant possession basis as opposed to an EDITDA multiple, so a suppressed 90-day valuation off a 65% loan-to-value metric would result in a 50%-55% loan to open market value ratio.  The assets were the product of many years of hard work, financial investment and marketing creativity, so their emotional value was almost equal to the financial value. 

Our involvement was focused on the fund raising. The components were simple; we had a fixed net number to redeem RBS GRG, a working capital float to raise and the loan needed to cover all associated transactional costs plus the lenders interest and fees.

The scope was challenging and simple in equal measure, to deliver the finance in 4 weeks.  This ruled out the vast number of lenders in the short term lending market, and despite what lenders purport, most are unable to deliver £6,000,000 of finance in this time frame.  The asset class and exit strategy also did not fit with most lenders.  Then finally, and crucially, we required a lender who was able to lend off an open market value figure, and not a 90-day valuation figure.  Through our ongoing investment in lender research and our relationships with funders we were able to quickly, and with confidence, select a lender that would deliver.

Thereafter Andy Lawson worked closely with the borrower to quickly advance the documentation and lenders due diligence requirements.  Starting at 7:30am and exchanging emails well past midnight Andy worked solely on this transaction from enquiry to close, including weekends.  His role involved the coordination of all parties, including the lenders solicitor, the borrower’s solicitor, the valuer, and of course the lender themselves.

The primary value we added to the process was to deliver a lender who would act quickly.  As crucial as lender sourcing is, just as important is the transactional support we provide to drive the deal forward quickly, whilst commercially navigating all obstacles.  The legal process remains the main time delay in transactions, with the selection of solicitors being a key focus when preparing a deal plan.

On the 22nd of February the funds were remitted and the deal closed.  After a short and intense sprint, the borrower was back in control of his assets and able to look to the future growth and profitability of his business, without the burden of potential insolvency.

Solvent restructuring is a specialist service we provide to borrowers and sponsors of Corporate and SME businesses, as well as developers and investors running property companies.

Our recent successes have been UK-wide and for businesses with £1m to £80m of debt and/or asset value, and we have experience in formulating strategies and delivering written down exits for Personal Guarantees.  Our recent mandates are across a range of asset classes from Anaerobic Digestion plants in the Renewables sector, to Golf Courses and Hotels in the Leisure sector.  Based in Edinburgh and active in London, we have also closed several cross border restructures for Isle of Man, Guernsey and British Virgin Island (BVI) companies.

If you, or your clients, are facing a restructure in the UK, or offshore, and need urgent, reliable finance options along with creative advisory services then contact Jamie Davidson at Conduit Finance. 

Jamie Davidson I Managing Director I 0131 564 0172

Jamie@ConduitFinance.com

The Evolution of Highly Geared Private Debt

The Evolution of Highly Geared Private Debt

In both vanilla and also restructuring transactions private debt is playing a pivotal role in making transactions happen.  The use is broader than its name might suggest.  It spans both corporate and property borrowing, and can come from private individuals, family offices or from larger funds.

There is a global availability of private debt lending from a range of sources, all of whom are hungry for an upper single digit, or double digit return per annum.  There are a number of local, US, European and Asian funding lines currently active in the UK.  These lenders are active in London but the real margins they seek are accessible in the regions.

Their appetite and liquidity is driven by a number of macro reasons such as the contraction of
European and U.S retail bank’s balance sheets, and the lack of dividends and yield available from equities.

These lenders have several unique selling points, such as short reporting lines that enable quick decisions to be made, pan‐European appetite out of one main office, and their flexibility when structuring covenants.  

If their benefits were ranked then gearing would be number one, certainty and ability to quickly deliver as number two, and number three would be the repayment structures, which can be interest only, rolled up or back loaded.

Recent term sheets we have delivered include: 

• 75% loan to value (LTV) facility on a single tenant office investment acquisition, at a 6.00% rate with only 4 years remaining on the lease.
• 90% LTV for a well located commercial building refinance at an 8.00% rate, which was going through a Bank of Scotland Business Support Unit (BSU) restructuring.
• 75% LTV bridge finance facility at 1.00% per month, for a hotel and land site exit from Royal Bank of Scotland Global Restructuring (GRG).

Pricing can vary depending on the transaction, with the leanest rates from 4.00% per annum for well located property investment lending, up to 15.00% for infrastructure lending.  They invariably seek “make whole” provisions to ensure they get a fixed return.

Much like the rest of the UK property and corporate lending market, there is a brisk evolution happening.  Interest margins are being compressed and there is a gradual uptick in LTV’s, which leads to a direct correlation in increased risk.

The record high volumes of lending in 2015 look set to continue into 2016 and beyond. 

Jamie Davidson I Managing Director I 0131 564 0172

Search for private debt bridging options here: Property Finance Finder

www.ConduitFinance.com

Brokers Love Conduit

In January 2016 we successfully completed a land bridge within a three week window for one of our valued introducers.

The facility was for £4,000,000, secured by a residential development site in England.  Our client was a house builder who was about to lose the site, along with the £2.5m profit that went with it.

Conduit’s Andy Lawson worked around-the-clock with the introducer to quickly pull together the due diligence pack and secure heads of terms that the borrower was keen to progress with.

The broker said, "Despite the complexity of the deal and very tight completion deadline, Conduit worked tirelessly to complete the facility for a very satisfied client."  Conduit Finance Managing Director Jamie Davidson commented, “This is the type of deal we enjoy delivering for our introducers.  We never circumvent introducers and welcome the opportunity to work with more of our partners in the future.“

Did we mention the broker received £32,000 for the introduction and was paid same day?

If you or your clients have a time pressured situation, then we are here to start early, finish late and work weekends to make it happen with our many sources of lending.

Jamie Davidson | Loans over £10m and restructuring | Jamie@ConduitFinance.com

Andy Lawson | Loans over £1m | Andy.Lawson@ConduitFinance.com

Edward Page | Loans under £1m | Edward@ConduitFinance.com 

Sean Crombie | Business Development | Sean@ConduitFinance.com

Mark Reidy | Business Development | Mark@ConduitFinance.com