Bridging Finance News

Bridging market size debate fuelled by latest report

August 31st, 2011

London based real estate bridging financier Montello has published a report into the current health of the bridging market.

They have named it the ‘Montello Report on the UK Bridging Finance Market 2011’.

Montello has also claimed that it is the first comprehensive report on the UK bridging finance industry since Datamonitor published their report on the market back in 2006.

The report looks at the size of the market, the regulation on it, various funding sources, and analyses recent trends in UK bridging finance.

The report estimates that the current ‘loan book’ for the UK bridging finance industry is between £415m and £755m. It notes that on this basis, the bridging finance industry represents less than 1 percent of the UK mortgage market.

The lower end of the estimation in the report goes against the recent prediction by West One Loans that the bridging market is set to hit £1bn in two years. This prediction cannot be correct if the lower end of figures given in Montello’s report are correct.

Christian Faes, director of Montello, said: “There is a lot of debate about the size and composition of the UK bridging finance market. It is a very opaque market, as there is no single industry group that represents the whole of the short term lending industry, and there is no regulatory organisation that collects data. Hopefully this report goes some way to explaining the market.”

Ian Thomas, director of Montello, also commented: “In the report we have also looked at the different ways in which bridging finance companies are funding their loan books, the trend towards becoming FSA regulated and some of the other trends such as some lenders moving beyond purely a short term lending product range.”

“In reality the bridging finance market has contracted in much the same way as the mainstream mortgage market. However this leaves substantial room for growth in the market moving forward.”

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New team members at Masthaven

August 9th, 2011

Due to Masthaven’s continued growth we have taken on additional staff to process the increased volume of business and ensure we deliver the service our clients and brokers expect and deserve.

Ben Morrison has joined us to assist in the processing and administration of the enquiries and applications including the arrangement of valuations.  Ben hails from Buckinghamshire and i am pleased to say is a keen sports fan so a welcome addition to the team.

Claudia Cataldo has returned to Masthaven on a short term contract having completed her degree in Accounting & Financial Management at Sheffield Hallam University.  Claudia has joined us as an Assistant Underwriter.  Her role involves making sure that loans are progressing smoothly through the system to enable completion without unnecessary delay.

We welcome them both on board and look forward to reaping the benefits of their assistance at this exciting time.

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Bridging Finance industry grinds to a halt – Bridging and Commercial Awards 2011

July 1st, 2011

It has been said that bridging business was brought to a grinding halt on Monday, June 27th, as the crème de la crème within short term finance gathered at the Bridging and Commercial Awards 2011.

Esteemed lenders, top intermediaries, powerful distributors and those who excel in the valuation, service aspects of the sector descended into the moat of the Tower of London, greeted by a bevy of models, sultry Cuban music, a couple of interesting gold men and a (very) warm welcome by their host for the day, Mo Mulki.

Aldermore collect Best Commercial Lender 2011 award from NACFB CEO Adam Tyler.

The theme was Casino Royale and the limited edition Summer Pavilion venue was the perfect complement with its red carpets, lush grassy expanses and decadent dining room.  During the summery drinks reception, time was spent alternating between soaking up the sunshine and heavily populating the Cheval-sponsored bar, marking just the beginning for certain distributors…

The atmosphere was exciting and filled with good old fashioned comradery, with people catching up with long-lost former colleagues and forging important new relationships.

The dining room doors were thrown open and 38 tables awaited nearly 400 eager guests.  Mo started the day off with a thank you to those present for their contribution in making this thriving, viable industry what is it today.

A delicious three-course lunch was served, beers were brought in by the bucket-load and wine flowed with speculations raised as to who had won which award amidst such interesting competition.  Indeed, certain nominees made their final efforts to secure their respective prizes, despite judgement having been made almost two months ago!

The moment all had been waiting for arrived, that in which those who have done the sector proud are honoured and commended for their hard work and dedication to the broker community.  Hosted by Mo along with certain prominent figures within bridging and commercial finance and accompanied by an impressive display of production in video, music and lighting, the awards ceremony commenced.

It has to be said that the winners who appeared most thrilled were MT Finance, crowned Best Bridging Newcomer.  Director duo Tomer Aboody and Joshua Elash collected the award on behalf of their firm.

Liz Locke presents Dragonfly Property Finance with the Best Product Range 2011 award.

Apprentice star turned bridger, Liz Locke, presented Dragonfly Property Finance with the award for best product range, celebrating their four self-proclaimed USPs: speed, agility, flexibility and transparency.

Two important awards, that of Best Legal Partner and Best Bridging Valuer, arguably the two areas which are closest to the heart of a good short term deal, were claimed by Brightstone Law and Aztec Property Valuers respectively.

Regentsmead collect the Best Development Lender 2011 award frpom Adam Tyler, NACFB CEO.

A very proud United Trust Bank team were presented with the title of Service Excellence, an award which represents a vote of confidence from brokers in the respects of trust, reliability and unrivalled case management.  Alan Margolis, Head of Bridging, said: “We were thrilled to win the “Service Excellence” award at the hottest event of the year.

UTB’s bridging team knows the importance that brokers place on service and that is why winning this particular award means so much to us.”

Bridging Lender of the Year is the category most vied for and the competition was very tough amongst the five lenders nominated.  With Cheval having held onto the title for two years running, could they make it three?  Would Lancashire Mortgage Corporation’s willingness and flexibility come up trumps?  Or perhaps Masthaven would emerge triumphant, a solid institution in whom brokers trust.  West One’s dynamic approach and appetite to lend could mean a win… However, there could only be one.  2011 has seen this team immortalised in the headlines for completing a £2.5m deal in just 3 days, securing a quarter of a billion funding line and causing a veritable industry stir with their rebrand.   Voting brokers and the judging panel agreed that Dragonfly Property Finance have set the standard when it comes to delivering a service which is market-leading.

Paul Aitken presents the Dragonfly team with Best Bridging Lender 2011 award.

Jonathan Samuels, CEO of Dragonfly Property Finance, said: “We’re delighted to have won the main award and also the Best Product Range award.  We’d like to give thanks to all of our brokers and partners who have played a vital role in bringing us to this point and most importantly we’d like to thank our team for all their hard work.”

 

Four prize draws ensued with fantastic giveaways to the tune of a James Bond Omega Seamaster watch, a slick Mont Blanc pen set and Man United executive tickets.

 

The remainder of the event saw guests generously support our chosen charities by taking part in the casino, sponsored by Goldentree Financial Services, with a slightly alarming amount of prize claims submitted by a crowd with more than sufficient experience in placing bets, it seems…

As the heat began to relent, groups clustered outside, stocked up with beer and enjoyed the uncharacteristic weather and good company.  A quick survey would tell you that the exclusive party gathered in the shade of the Tower, looking deservedly self-satisfied, represented an industry which was having somewhat of a moment.  The day was a celebration of this ongoing success and a testament to what can be achieved through hard work and dedication.  With leaders like these, this year is bound to be yet another prosperous one for the sector.

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Are bridges about to get longer?

July 1st, 2011

Having conquered the short term lending market, the entrepreneurial minds behind some of the UK’s leading bridging finance providers are eyeing up the opportunities presented in the less saturated medium term loans market.

“In terms of 2-year to 5-year products, I think there is a niche for it. I think it’s a specialist sector and for those lenders with access to funds, I think there’s an opportunity there,” said Bridgebank’s Managing Director, Laurence Goodman.

Christian Faes of Montello added: “Montello currently does not lend for longer than 12 months. It is a market that we are looking into quite closely.”

Intermediaries within the market appear to be welcoming the possible increase in medium term products, which they see being utilised not only as an additional offering for borrowers, but also as an adjunct to bridging.

“It’s an excellent way of fulling the requirements for those who it just wouldn’t be feasible to consider a short term loan, and would hopefully provide a transition into traditional bank lending a few years down the line when constraints we are currently experiencing become less prevalent in the mainstream arena,” said Lucy Barrett, Director of Vantage Finance.

Dragonfly Property Finance have already added a medium term product to their portfolio. Jonathan Samuels, CEO, explained that the product’s launch, approximately one year ago, was driven by a growing demand from borrowers looking for buy to let finance but struggling with the high street lenders.

“Whilst high street mortgages are for the long term, in reality borrowers tend to view mortgage deals with a 2-5 year time horizon hence the popularity of the 2-5 year fixed deals. Our medium term product is fixed for three years so even if the base rate moves up the borrower knows where they stand,” he said.

Yet whilst several lenders have expressed their interest in the medium term market, and a few have already launched theirs, for the majority of companies a transition would not be simple.

This is in part due to the nature of the typical funding lines which support most lenders. The monies tend to be provided at a comparatively high interest rate to the bridger and therefore profitability is dependent on high returns from the borrower - something which is much easier to demand in a short term product than in a longer one.

“Ultimately a lender will need to source or provide a different funding structure to enter a product of this nature,” said Gareth Lewis, Head of Business Development at Tiuta.

“Demand is one thing however being able to meet demand with a product that suits the potential borrower and delivers for the lender is another.”

Christian Faes added: “In the current market it seems that the decision for a short term lender to evolve into a medium term lender all depends on what their cost of funds are and how much capital they have access to.

“If you are a lender with relatively expensive capital and a smaller loan book, then you are likely to want to stay a short term lender. If you have access to relatively cheap capital and a lot of it, then a medium term offering could make sense.”

Having spoken to most of the leading names in the bridging finance sector, it seems that the only thing stopping these lenders launching a medium term product is their current funding structures. Furthermore, even those whose current funding lines would not support the products could not rule out the possibility that they may extend the length of their bridges in the near future.

Tiuta, Montello, Bridgebank, Omni and Precise are all thought to be pondering the proposition with ‘due diligence’.

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Former Manchester United star slashes asking price by £250k

July 1st, 2011

Ex-Manchester United star Phil Neville has lowered the price of his Manchester city centre apartment by a quarter of a million pounds, after struggling to find a buyer.

Neville first put the Beetham Tower apartment up for sale last year and attached a price tag of £4m. It was thought to be the most expensive flat ever to be put on the market in Manchester.

Nine months since this record was hit though, it seems that there was in fact a reason why prices were generally much lower for similar properties in the area. A local estate agent commented that the price reduction was a reflection of the market generally.

Phillip Diggle of Gascoigne Halman told the Manchester Evening News: “Knocking £100,000 off a property at this level is not going to have much effect. You have to reduce it to the next level of interest, which is what we have done.

“Phil and Julie are still living there, they enjoy being in the city centre and are in no rush to sell but they understand that they have to take action to keep things moving.

“And it is the most expensive apartment to be sold in Manchester for good reason – the specification and fit-out is absolutely superb and the views spectacular.”

The apartment is in Europe’s highest residential blocks and features three bedrooms and three stories. It was bought by the Neville’s in 2006 for over £1 million.

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Islington businesses beg for bridging finance

June 20th, 2011

A leading figure in Finsbury Park’s business community appealed to high street banks this week on behalf of Islington businesses who have struggled to secure finance through the recession and still feel that borrowing is nigh impossible.

Chairman of Finsbury Park Business Forum, Courtney Bailey, noted that at least a dozen small businesses and shops had collapsed in the past few months due to their inability to secure bridging loans and other funding lines from the major banks, the Islington Tribune reports.

Senior officials from these major banks have been summoned by the forum for a meeting to try to come up with a plan to minimise the severity of the situation.

“They (the banks) want to offer cash but are often overruled by bank executives higher up the chain of command,” said Mr Bailey.

He explained that whilst banks frequently tell him that loans are available, “the reality is that it is just not coming through in time for firms who are struggling with debt and many are going under.”

“My message to banks is this: look towards the future. Things hopefully will improve but if the high street banks don’t want to help out when times are bad why should businesses want to give them gustom when times are good?”, said Mr Bailey, who runs a 25-strong energy company.

The Chief Executive of Islington Chamber of Commerce, Ronke Lawal, also added his complaints. He said: “In Camden Passage, where traders are struggling with massive new rent and business rate increases, the banks won’t give them a loan.”

Yet whilst the business communities were clearly dissatisfied with the majority of high street banks, Lloyds was flagged as being one of the few who were willing to lend to struggling firms.

Talal Karim, Chief Executive of social enterprise board FinFuture, said that he hosts regular one-to-one sessions between traders and officials from Lloyds TSB bank.

“Lloyds have been very helpful and many traders have benefited,” said Mr Karim. “We now want other big banks to come on board.”

Lisa Parsons, area director for Lloyds TSB commercial in West London, said: “Now is an absolutely crucial time for small businesses. Their success over the coming year will be instrumental to the economic recovery, but many may be lacking the confidence to expand, diversify and seize new opportunities.

“It’s crucial that they have the support, guidance and knowledge they require to grow and it’s up to us at Lloyds TSB Commercial, as well as other banks, accountants and advisers, to provide this.”

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Prominent tycoon folds multimillion pound property business

June 20th, 2011

After declaring real estate an unattractive ‘avenue’ to pursue at the moment, the former right-hand man of the Tchenguiz brothers has shut down his corporate finance and property advisory firm, Three Delta.

Paul Taylor told his staff on Tuesday morning that they would soon be made redundant as the business wound down. The staff will be paid in full.

Mr Taylor confirmed the surprise move to Estates Gazette: “The decision was voluntary and was not made under adverse circumstance – there is no debt or anything else that forced the decision.”

He continued: “There are better avenues than real estate to pursue at the moment that are a lot more viable.”

Just before its closure, Three Delta was not operating as a property management company, and only ran an asset finance business.

It is likely that employees were extremely shocked by the shut down, as the company had taken steps to raise funds for an opportunistic property fund and a core property fund.

In pursuing the core property fund, Three Delta had hired a firm from Invista Real Estate to support the venture.

Property Week reported that a source close to the company said that the market for highly leveraged, structured finance and opco-propco deals had dried up, and that Taylor would pursue other businesses.

Paul Taylor’s notoriety within the property sector was first shown when, in 2000, he became a key lieutenant to Robert and Vincent Tchenguiz, having left his position at Natwest’s structured finance business to become chief executive of Rotch, the Tchenguiz’ private business.

His name was once again in the spotlight when, after leaving the Tchenguiz brothers’ company in 2006 to establish Three Delta, his firm was the adviser to multiple highly leveraged deals undertaken by the Qatar Investment Authority (QIA), including the £1.4bn purchase of Four Seasons, a portfolio of care homes which were mostly occupied by Southern Cross.

Most of three Delta’s issues are thought to have arisen following the failure of the company’s £10.6 billion buyout of Sainsbury’s on behalf of QIA.

The QIA withdrew from Three Delta in June 2008 and whilst Taylor clearly attempted to reposition the company, his future business efforts shall be focused elsewhere.

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Merger creates UK’s largest property adviser

June 8th, 2011

This week saw global commercial real estate firm Jones Lang LaSalle merge with international property consultancy King Sturge, creating the UK’s largest property adviser.

Under the terms of the transaction, which is thought to have closed On Tuesday, Jones Lang will pay consideration of £197 million to King Sturge’s partners with £98 million to be paid at completion and the rest of the balance over five years.

All 43 King Sturge offices and businesses across Europe, including 24 in the UK, will become part of Jones Lang LaSalle and will operate under the new brand. Integration of the business lines and teams, as well as the full rebranding of all business activities, will commence immediately. King Sturge’s operations are expected to be ‘fully integrated with Jones Lang’s by the end of the year.

Christian Ulbrich, Jones Lang LaSalle Chief Executive Officer for EMEA, said: “The obvious strategic and cultural fit between Jones Lang LaSalle and King Sturge makes this a logical and very attractive proposition for both firms.  It gives us a scale and depth of expertise that will make our client service delivery capabilities second to none in both the UK and continental Europe.”

Richard Batten, Joint Senior Partner at King Sturge, added that this was ‘great news for all of King Sturge’s staff and clients’.

Yet whilst the augmented capabilities of the property giant may benefit both Jones Lang and its current clientele, the scale of the operation leaves other industry players fearing the emergence of a monopoly power in the market.

Stephen Johnson, New Business Director at Whiteaway Laidlaw Bank, said: “The transaction removes competition and choice from the market as these are both high end commercial property firms; clearly it makes sense for the businesses themselves and their partners, but from a lenders and brokers perspective it means one less option.”

Rob Lankey, Managing Director of Commercial Mortgages at Aldermore, added: “Further contraction of the market could be viewed as damaging from a competition point of view but this merger of two of the heavier hitters is likely to create a formidable player and I would view this as a positive move overall.”

This latest merger is part of an ongoing growth path for Jones Lang, who has expanded its global presence to 60 countries by acquiring 30 smaller brokerages since 2005. The acquisition will undoubtedly bolster the firm’s proportion of share revenue from Europe – which accounted for 25 per cent of income last year, the company said.

The transaction is also thought to be one of the fastest routes available to King Sturge for growth. According to Bloomberg, since Jones lang sold Shares in an initial public offering in 1997, it may easily raise money in the stock and debt markets to finance expansion, while King Sturge’s partnership structure makes expansion harder.

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The poor get poorer while the rich stay rich

June 8th, 2011

The most recent figures from Britain’s Property Rich List 2011 show that the North-South property divide is widening.

The figures, released by zoopla.co.uk, showed a phenomenal difference between average house prices in some northern streets compared to their southern counterparts.

In fact, all those listed as the top 10 highest value streets were in London, whereas all in the lowest value were situated in the North.

The average price for a house at Kensington Palace Gardens, London, stood at £19,262,319, while the average price for a home on Merryfield court, Skegness was just £30,873.

Nick Leeming, business development director at zoopla.co.uk, said: “Despite the recent property market uncertainty, Brits remain obsessed with the value of their home as well as those of their neighbours, friends and family.

“This year’s Property Rich List shows an ever-widening North-South divide and, whilst house prices in some of the most expensive areas of the country have fallen a little over the past 12 months, they have held up far better than in many of the less expensive areas.”

Britain is now home to 220, 131 property millionaires, down from 223,119, according to the list. Unsurprisingly, London topped the list as having the most ‘million pound streets’, at 2,290.

Surrey, which continues to attract commuters, boasted 89 of the streets in Guildford and 78 in Cobham.

However, despite the widening gap, some experts suggest that investments in northern property could be fruitful, particularly in the commercial sector.

At a speech given to some of Yorkshire’s most elite businesspeople at the launch of the Yorkshire Post Business club recently, Richard Tuffy, a partner at Goldman Sachs, suggested that the North of England could in fact be a driving force in economic recovery.

“The North of England in general has to be the engine of recovery. For too long, the North has been seen as the handicap, the thing that’s dragging the rest of the UK economy down and as a passionate advocate of the North, I think Yorkshire and the manufacturing base here should play a key part in that,” he said.

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