How we deal with complex Commercial Bridging Finance briefs
Offshore structures are a huge part of our economy. Anything from water utilities, telecoms infrastructure, care homes and commercial to residential property are owned either directly or indirectly by offshore structures.
In March 2019, the Guardian website confirmed that more than £100bn of UK property is owned by offshore companies – totalling 87,000 properties. 40% of the properties owned in offshore companies are in London. In Cadogan Square in Knightsbridge, where the average property costs £3m, at least 134 properties are owned by offshore entities. Buckingham Palace Road is also home to a large number, with a combined estimated value of £350m
It should be noted that this is a significant decrease from February 2018 when the Times reported that 97,000 properties in England and Wales are owned by offshore structures and shows that the Government tax policies designed to disincentivise offshore/corporate ownership is potentially having an impact, however it is still a very significant number.
Offshore structures include companies, trusts and partnerships registered abroad and are regularly used for joint ventures between companies in different countries, financing Special Purpose Vehicles, stock market listings and as holding companies.
Many lenders are unwilling to lend to offshore structures because they often do not neatly fit into predetermined criteria or risk profiles. Lenders may also be unwilling or unable to grapple with any complexities, which can extend to the security over the asset and even the underlying reason for the loan.
There are numerous examples of these so-called complexities, including title anomalies, unusual leases complex loan buybacks and debt settlement transactions.
Whether or not these factors genuinely increase the complexity of a transaction is open to debate. Often, the issues are easily explained if the lender is prepared to listen and keep an open mind – and instinctive suspicion on the part of lenders can sometimes be a major part of the challenge. However, few can deny that they increase the number of moving parts in a transaction and require a lender to deploy their experience and specialist knowledge, however it ultimately comes down to the experience and expertise of the lender.
At Ortus, our senior management has proven track records in investment and private banking, working on big transactions with highly sophisticated clients. We know that a complex situation does not necessarily equate to a problem and, in any case, the “crinkle” is often the reason the client is seeking alternative finance in the first place.
The key is to focus on understanding whatever issues genuinely exist, making an early an meaningful commitment and then getting the deal done.
In this regard, deals with offshore structures also cannot be managed chronologically or on a box ticking basis – a more holistic, project-based approach is required. For example, calls and meetings with clients need to happen at the beginning of the process; Know Your Customer needs to happen simultaneously with underwriting; and maintaining a deal-tracker system is essential. We don’t just apply this approach to offshore structures either – we also lend to non-UK nationals and pension funds, amongst others. Our experience has marked us out as a lender who can deliver, and we look forward to further growing this area of our business.
For other complexities, it’s about the lender being clear at the outset about what will constitute satisfactory information. We don’t ask for one set of documents/evidence and then ask for more once it’s received. We learn from our experience and give a comprehensive shopping list at the outset.
In summary, regardless of any complexities, offshore structures still need access to finance and this is where alternative providers can step in. At Ortus Secured Finance, we are regularly told by brokers that one of our key USPs is accommodating complex structures and borrowers that do not ‘tick the box’ for other lenders.
If you’re currently dealing with a complex case Click here to speak to one of our team.