Lack of liquidity from financial institutions and fundamental mispricing allowed us to source well priced and newly originated loans for quality assets.
New lending volumes from banks should remain limited in the next 2–3 years with conservative terms and high costs due to:
- “Capital adequacy” rules will force banks to reduce lending or increase capital
- UK players have extensively reduced their business while international Lenders which were important Lenders to the UK real estate sector are out of business
- Large part of the activity is extension of existing maturing loans
- Banks are chasing the same deals with long term income and strong covenants on good assets located in prime locations
- Lenders are generally closed to new customers and are concentrating on supporting existing clients
- Current market shows that Lenders have increased their margins and fees dramatically, reduced loan amounts and loan to values.
This situation creates a unique opportunity for a specialized Lender who does not have a “legacy problem” and is able to capture the opportunity and mispricing on the market. Therefore, we are entering the market at a time when liquidity is high enough to be comfortable on collateral value and will focus on senior and junior financing for short term maturities:
- Origination loans secured on real estate assets (London area only) with real estate professionals in order to attract interesting lending opportunities and with existing “distressed Lenders”
- Lending to individuals who are in need of timely execution
- Origination of new loans with conservative equity level, controlled third party risk and viable repayment/exit strategy
- Distribution via top London mortgage brokers. We will be able to provide access to a property finance business that has traditionally only been a bank business whilst delivering superior risk adjusted returns on a strong and clear risk profile.