There seem to be more re-bridging deals than ever
A trend noticed in the most recent (April 2019) EY study into the specialist lending sector remarked that a significant proportion of bridging transactions are in fact re-bridges.
Situations and scenarios are ever-changing, and many borrowers find themselves needing extra time to finish their projects. If leverage is low, then trading equity for time is no problem. But problems arise as loan to value increases and precious equity is eaten up which can often make the entire exercise a false economy.
As ever, understanding is key and here at Ortus Secured Finance we exercise diligence before we issue AIPs. Once we get on board with a deal the whole team here works together to fund, safe in the knowledge that the credit committee has approved the transaction right at the beginning. We’ve funded a significant number of re-bridges recently and we’re grateful for borrowers and brokers who can outline the history of the transaction so that we can make a quick and clean decision.
It seems that there was some release of pressure a few weeks ago when it became clear that Brexit would be further delayed. There were clearly many individuals who were unable or unwilling to wait any longer before acting upon their need to invest in property.
At Ortus Secured Finance we have seen a steady stream of new business, and key areas such as hospitality & leisure are transacting well. As is par for the course at this time of year, enquiries and deal flow is further ramping up as we edge towards Christmas and we are particularly keen to work with our brokers (both new and existing) on new deals. We remain focussed on our core interests of complex, large (up to £25m and beyond) and commercial bridging opportunities.
Now for the three case studies:
We had the pleasure of working with a great borrower and broker for an ‘out of the ordinary’ deal. Our client wished to complete on the purchase of a wedding venue at below market value. The client had a strong history of operating wedding venues and clearly understood the market.We were able to look at projected figures and gain comfort in the client’s ability to deliver on his business plan which would then facilitate a term exit. Wedding venues seem to be a recurring theme of late. It is clear that if well operated, they can be real sources of value for clients and investors.
Ortus is also active in funding developer exits. Our client had finished the completion of a few residential dwellings and needed some extra time to finalise the sales process. Their existing development lender was only able to offer a short extension for redemption which was not enough time to sell the properties. Thanks to a great broker and a motivated client, we were able to look at the borrower’s strong track record, and deliver a developer exit deal at 0.75% pcm and at 70% LTV.
Care home acquisition
We recently assisted a client with no sector experience in the acquisition of a care home facility. We were able to look at the projected EBITDA and understand the transformations that were required to achieve this. Our ability to lend based on projected figures enabled us to lend despite trading figures that would not have worked with a term lender. The client had kept the existing management team in place, and her own professional background was able to give us the comfort needed to lend, despite not necessarily being in the same sector.