Are you a housebuilder or developer looking to grow your business?

Housebuilders’ head office operational costs have invariably been funded by the business owners, project profits or third party investors.   Current market conditions favour housebuilders, but as ever it's about maximising the opportunity when it presents itself. 

Most development finance lenders allow a level of management team overhead to be run through the SPV cashflow, but it's usually not enough to fully fund a growing business. 

The availability of growth capital for this purpose has improved, and recently there have been individual investors and established private equity funds investing in this sector. 

Striking a balance between access to capital and maintaining control is key. 

These investments are being used by developers to open up new sites, amass land banks for a consistent pipeline, or to act as the equity needed to access cheap 60% LTC senior debt. 

It's also useful to be able to pre-fund a growth in full-time head count, to lead to more development activity. 

Investment amounts vary, from a few hundred thousand pounds, into the millions, with investment terms ranging from 1-5 years.  

Investor expectations consist of two components: 

1. An annual coupon or interest rate, which can be serviced monthly or rolled up.
2. Capital return, which can be an IRR or multiplier based model, depending on the profitability of the business. 

The investment partner doesn't have to be a friend for life, but just for a defined period. Ensuring that their role and input is clearly defined is crucial, as the primary role of the capital is to grow the business, not to run it. 

If this sounds like a means which could help you grow your business, then get in touch to discuss specific figures relative to your business, and your aspirations.

Jamie Davidson, Managing Director

07919 863 034
Jamie@ConduitFinance.com

Online Property Finance Brokerage Delivers

When you want to move fast you need options. By using online property finance brokerage www.PropertyFinanceFinder.co.uk our client secured a market beating facility at 0.85% per month, and it was done quickly. Time pressure was a factor with the change in tax laws due on the 1st of April.  

By controlling the process the borrower was able to personally select the most suitable lender for his needs based on pricing, loan to value and geography. He selected a flexible lender who was new to market, which helped him secure the loan without the need for lengthy application forms or multiple layers of lenders underwriting. 

The lender had been recently added on to the platform so the borrower benefited from a new to market lender, despite the funder having limited profile at the time. Providing borrowers with access to best in market pricing is something we do every day. Our research team are constantly speaking to new and established lenders to understand how they can offer our property developer and landlord clients the best possible deal every time they need to borrow. 

Having delivered the desired loan quantum with a lenders fee of 1.00% and at an interest rate of 0.85% per month with no exit fee, our client was extremely happy.  

By ensuring the process moved along swiftly on both sides of the transaction, the deal was completed in 4 weeks. 

We now look forward to assisting this borrower with long term finance, as we work to launch the new property investment component of Property Finance Finder. 

To view which lenders could offer the best rate, or the highest loan to value please visit www.PropertyFinanceFinder.co.uk.

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

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 

Residential Development Finance – Latest Funding Prices

Having returned to the UK after working overseas, it is clear that the property development finance market is quickly evolving.  The widespread under supply of housing is supported by huge demand from occupiers and investors alike. 

The various sub-sectors are all equally active, with student housing and private rented sector both at the forefront.  As such the lending market is evolving by the day, with more and more liquidity coming into the market.  Loan to costs are increasing, while pricing is compressing.

We have seen an increase in the number of lenders active in this sector.  Retail banks are providing rates as low as 2.50%, and stretched senior lenders can provide attractive loan to cost facilities at 90%. 

This week we have received several telephone calls from newly active lenders looking to deploy capital into the UK residential development finance market.  Most of these lenders are backed by private equity funds or family offices seeking income yield.

Lender type                    Loan to cost                Lenders fee             Rate pa              Exit fee
Family office                    100%                            2.00%                       7.00%                 0% of profit
High LTC 1                       90%                             1.00%                        10.00%                1.00% of debt
High LTC 3                      85%                              1.50%                        6.50%                 1.00% of GDV
Lean pricing 1                  65%                              1.00%                        3.00%                 0.00%
Lean pricing 2                 50%                             0.50%                        2.50%                 0.00%

2016 is likely to be an active year for lending in the UK, with 2015 having seen the highest levels of property finance since 2006.  We would anticipate that there will be an inevitable increase in the lenders risk appetite, and a reduction in the net cost of finance as lenders compete for transactions.

If you have any requirements we can directly quote for, then please do not hesitate to get in touch with me by email or phone below.

Sean Crombie

Sean@ConduitFinance.com
DDI: 0131 564 0274
M: 07595 520 577

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

Mark Reidy strengthens the team at Conduit Finance

Mark Reidy has joined the Conduit Finance team as Business Development Director.  He brings 20 years of financial services experience to the Edinburgh head-quartered team.  Prior to taking up this role he worked closely with property developers for the Checkmate division of Lockton Companies LLP, one of the world’s largest privately owned insurance brokerages.  

Mark also spent time in the senior team of Buildstore, who specialise in self-build, custom build and residential development funding.  He is a client focussed and service driven business professional, who will help provide clients with bespoke solutions under the Conduit Finance and PropertyFinanceFinder.co.uk brands. 

Conduit was launched in 2007 by Managing Director Jamie Davidson.  Conduit Finance has continued to provide a point of difference in Corporate Finance for SME, Corporate and Property clients.  Factors that differentiate Conduit from the competition include their extensive panel of established and emerging lenders, the technical ability to structure deals, their solvent restructuring track record and expertise, and their dedication to increasing their clients' wealth. 

Mark joins the eight strong team and will be working closely with Managing Director Jamie Davidson to improve the client proposition, grow revenue and improve processes.  Jamie said “The appointment of Mark to the team is a real win for both the business and our clients.  Mark’s proven high levels of service, trust and transparency are well aligned with the values within our business.”

Price Update - Development Funding

Development Funding - up to 90% Loan to Cost

Active lender has recently increased the maximum loan to cost on residential development deals to 90%

• Loan Sizes of £500,000 to £10,000,000
• Arrangement fee 1.75%
• Rate 7.25% per annum
• Exit fee 1.50%
• Term from 6-24 months
• All UK locations considered

Please contact Edward Page for all requirements up to £1m and Andy Lawson for deals above £1m.

Email Andy.Lawson@ConduitFinance.com orEdward@ConduitFinance.com or call 0131 564 0172.

Price Update - 2nd September 2015 - Expat Buy to Let, Commercial Investment and Development Finance

Please find below the latest product prices from Conduit Finance.  Of particular note is the Expat Buy to Let Mortgage, we recently completed a deal using this lender and assisted a client who was struggling to find a lender in the UK.

Expat Buy to Let Mortgages

Available to overseas clients with no current credit in the UK for the purchase of Buy to Let and second homes.  We recently completed a deal using this lender. The borrower was a solicitor based overseas who was struggling to secure lending despite having substantial net worth.   

• Arrangement Fee 1%
• Variable Rate of 4.50%
• Interest only repayments
• Loan term 20 years and an Loan to Value of 75% 

Contact Ed Page page for loans below £1m and Andy Lawson for loans above £1m.  

Call 0131 564 0172 or email Edward@ConduitFinance.com or Andy.Lawson@ConduitFinance.com 

3.0% Interest Rate for Residential Development Finance 

Prime pricing available for well located sites at a moderate loan to cost 

• Heads of terms in 3 days 
• Lenders fee from 0.5% to 1.0% 
• Interest rate from 3.0% to 3.5% 
• Loan to cost up to 65% 
• Exit fee 0% 
• No personal guarantees 
• Completion in 6 to 12 weeks 
• All we need to determine if this pricing can be achieved is a cashflow appraisal. 

Please contact Jamie Davidson for loans of £5m or more, Andy Lawson for loans between £1m and £5m and Edward Page for loans below £1m.   Contact Jamie@ConduitFinance.com, Andy.Lawson@ConduitFinance.com or Edward@ConduitFinance.com or call 0131 564 0172.                   

Commercial Investment Facility

New to market lender offering gearing up to 70% and pricing from 2.60% over cost of funds

• UK Wide
• Office, Retail, Industrial and Leisure
• £2m - £15m
• Loan to Value up to 70%
• 5-20-year term
• Long-term amortisation profile
• 1% Arrangement Fee
• No personal guarantees

Call Andy Lawson on 0131 564 0172 or email Andy.Lawson@ConduitFinance.com 

Price Update - 24th August 2015 - RPD and Buy to Let

100% Residential Development Finance without Personal Guarantees 

Private debt lender with considerable experience in the sector is looking to deploy capital in to projects with a 25% min net profit on cost. 

All purchase costs and build costs lent
Experienced developers only
Lender charges a flat interest rate and a % of profit equating to a total of 20%-30% of profit
Developer retains 70% + of the profit with any upside on projected GDV retained by developer
Scotland preferred but other locations considered
Loans from £1m to £10m
Loan term from 12 to 24 months 

Please contact Jamie Davidson on 0131 564 1970 or Jamie@ConduitFinance.com for further information.

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Buy To Let Finance, 80% LTV with £995 fee

Lender providing highest available loan to value for buy to let purchase and refinance

5 year fixed rates available, security with interest rates forecast to rise
Available to experienced & first time landlords
No minimum income criteria
Rental income calculation based on interest rate of 4.99%

Please contact Stuart Cardozo on 0131 564 0172 or email Stuart@ConduitFinance.com for more information.