Case Study: Arc & Co. secure funding for £2.4 million residential development site

Client: Joint venture between Leading Homes and Muniment Ltd

Requirement: Arc & Co. have secured funding for a £2.4 million phased residential development scheme in Totnes, Devon, on behalf of the joint venture clients. There were a number of moving parts which required detailed planning and close attention to obtain the optimum financial solution for the build of the initial 26 units.

Solution: Funding was successfully secured at 60% Loan-to-Gross Development Value. Two factors which added a little more complexity to the process, included the clients being located in different time zones and the development site being in an area that not all lenders have been regularly exposed to. Ian Walmsley, Director of Leading Homes, concluded on working with Arc & Co.: “We enjoy working with quality partners and Sam has proved to be one. Trevor and I are always looking for new opportunities and having someone like Sam to act swiftly on new deals is vital for both us and our investors.”

Details of the project can be found at http://totnesproperty.com.

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Contact: 
Sam Le Pard
Arc & Co. Structured Finance   

T: +44 (0)20 3205 2195 
E: sam@arcandco.com

Judd Cole Joins Arc & Co.

Arc & Co. strengthens their Private Finance team with the addition of Judd Cole. Judd will head up Arc & Co.’s operations for Southern Europe, where he provides debt advisory on Real Estate, Marine and Aviation.

Judd has worked in the international financial markets for the past 20 years. He previously worked as a Propriety Trader in Paris, and as a Bay Street Investment Advisor in Toronto,  working closely with TD Wealth and RBC Dominion Securities. Judd has extensive investment banking knowledge and a vast global network with a deep grasp of structured finance. He lives with his family in the Monaco area.

Andrew Robinson, Arc & Co. CEO, said of the addition ‘it’s a privilege to grow the team with someone who has the vast market experience such as Judd. He brings a perfect mix of experience and knowledge with private wealth clients paired with Arc & Co.’s debt advisory it will provide real substance to our platform’.

To get in touch with Judd, please find his contact details below:

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Judd Cole

Arc & Co.
30 St. George Street, London W1S 2FH


Tel: +44 (0) 203 971 2512 (UK)
Mob: :+33 (6) 29 86 36 09 (France)
Email: judd@arcandco.com

www.arcandco.com

Arc & Co.'s Jeremy Robinson features in Development Finance Today and NACFB

Arc & Co.’s Jeremy Robinson has hit the press this week with his article:

‘Clearing banks - a timely return to the development funding market’

The article has so far appeared in Development Finance Today and NACFB.

A preview of the press coverage is below, along with the article in full.


Clearing banks - A timely return to the development funding market?

One of the first impacts of the global financial crisis was the withdrawal of the high street lenders from the development funding market for the vast majority of smaller and medium sized developers. 

As the market has recovered since 2010, a variety of participants has moved into the space they vacated, from a very diverse background: private funds from family offices, specialist lenders, P2P platforms, listed vehicles, institutional funds, traditional bridging lenders and challenger banks have all competed for this market share. 

This increasing liquidity has resulted in strong competition in what had become a smaller segment of the overall housebuilding market, with the numbers of smaller housebuilders having not recovered to the numbers seen before 2008, with the uncertainties of the planning system, and the perception amongst those who just approached their high street lender that funding would not be forthcoming putting potential developers off. 

Jeremy Robinson   Asset Finance Advisor - Structured Finance

Jeremy Robinson

Asset Finance Advisor - Structured Finance

Gradually, however, the broker market together with the mainstream and the development funding press has raised perception that this diverse funding market can be accessed by smaller developers. Challenger banks, in particular, are visible in increasing loan books, and this has started to come to the attention of the high street lenders. Until recently, losing clients and market share did not seem to bring much reaction: it seemed like they were comfortable with others taking the action. 

Seemingly, they were comfortable with a dwindling market share, and were not keen to pursue new customers, being happier to service those clients they had remained with since 2008.To the extent they did have an appetite, the common trend has been to provide funding lines to the new lenders, whereby they would be cushioned from any downturn by the equity of those funders, and would have no need to develop their own back office teams to handle.

Is that now starting to change? At Arc & Co. we have recently been approached by 3 different high street names, all keen to expand their development funding offering and perhaps recover that market share. As a recognition of the need to compete in the market, two of them have teamed up with funds to offer levels of gearing that move well beyond that traditionally offered, and compete with levels that the challenger banks and others canoffer.  One of these partners has been very active in the market over the last 10 years, whilst the other is new, so this is a very interesting move. Given the cost of funds advantage that the high street lenders enjoy, the overall products appear very competitive indeed. To try to tackle the slightly negative perception over process, one has set up a dedicated arm to directly serve the broker market, liaising with the internal departments to try to ensure that timelines are manageable. 

We have seen some of the new entrants to the market experiencing issues with funding lines over the last few months. Also, uncertainties over Brexit and the stamp duty increases have slowed down end sales, causing lenders anxiety. If, however, this return to the market by the high street lenders is sustained, then overall liquidity will increase and the competition for market share will intensify, leaving the market robust and hopefully tempting more of those small developers back. 

Press Coverage

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Case Study: Arc & Co. secure 50% LTV deal for UK Resident Non Domicile client

Client: Private Lebanese individual

Requirement: Our client – UK Resident Non Domicile – was looking for maximum loan-to-value (LTV) on a dry lending basis for a property in Westminster, for his personal use. The property was valued at £18 million. This deal presented a number of potential hurdles, which Arc & Co. were able to work around. The first being that the client had been retaining the majority of his income within a UK business and the second being that the client had a large amount of overseas income which was not being remitted into the UK.

Solution: We were able to secure a loan of £9 million (50% LTV), which was a notable achievement when properties at this value tend to get down valued. Arc & Co. undertook extensive research prior to the valuation stage and gathered comparable evidence to support the indicative property value. The margin was 1.85% over 3 month libor for a 5 year interest only term.

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Contact: 
Daire Dowling
Managing Director
Arc & Co. Private Finance   

T: +44 (0)20 3205 2196 
E: daire@arcandco.com

Case Study: Arc & Co. secure buy-to-let mortgage for Kazakhstan client

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Contact: 
Nikita Nigai
Asset Finance Advisor
Arc & Co. Private Finance   

T: +44 (0)20 3205 2122   
E: nikita@arcandco.com

Client: Private employed individual from Kazakhstan

Requirement: Arc & Co worked on behalf of this private individual to obtain a buy-to-let mortgage for a new build flat in London with a value of £875,000. This was a complex deal due to the personal circumstances of the individual and him not having clear proof of income.

Solution: A loan of £596,800 was secured and with a loan-to-value ratio of 68%. This was at a rate of 0.9% per month and for a 12-month period. We also negotiated rolled up interest for the first 3 months, with no ERC (after the first 3 months) and the arrangement fee added to the gross loan amount.

News: Arc & Co. complete prime residential finance deals in London

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Mayfair-based specialist debt advisor Arc & Co., has recently completed £70 million of loans for the refinancing of 3 prime residential London assets. The loans have a maximum loan-to-value (LTV) ratio of 65% and were all completed in the last month of 2018.

The loans provided refinancing for three development sites in Holland Park, St Johns Wood and Hampstead. The sites comprise a single development unit with a red book value of £50 million, a further single unit with a red book value of £34 million and a multi-unit development site comprising 31 apartments and 4 townhouses, with a red book value of £34 million and aimed at investors and individuals looking to downsize.

The London prime residential property market has been in decline since 2014 with very few lenders supporting the high value market.

To read the full release, please click here

There has been a slight reverse in funding of prime residential property in the last 6 months, with new funding lines now available to developers. Following years of funding restrictions in the prime residential market, investors are now seeing the relative value and taking a longer-term view.

Over the past 3-4 years, it has been incredibly hard to finance central London development sites and these loans and the LTV ratios achieved, show that there is still liquidity available for the right projects and best sponsors.
— Edward Horn-Smith, Arc & Co.

Contact:

Edward Horn-Smith, Managing Director, Structured Finance - Arc & Co.

T: +44 (0) 20 3205 2126 E: edward@arcandco.com

News: Arc & Co. advise on £45 million blended debt facility to secure funding for EREC Estates Ltd 502-bed Purpose Built Student Accommodation development site in Coventry

  • Octopus Property’s largest ever development loan of £36 million 

  • Third Purpose Built Student Accommodation deal with developer EREC Estates Ltd

  • Both Coventry and Warwick universities facing a significant bed shortage

The Scheme

London, 7 February 2019 - Specialist property lender Octopus Property, part of the Octopus Group, has agreed to provide EREC Estates Ltd, an experienced UK developer of student accommodation, with a £36 million senior loan for the development of a major Purpose Built Student Accommodation (“PBSA”) scheme in Coventry. The scheme was brought to Octopus Property by John Kerrigan – Director at Arc & Co., who advised EREC Estates Ltd on the debt structure, which also included a £9.2m mezzanine loan.  This loan represents the largest ever development deal completed by the team within Octopus Property.

Arc & Co.’s John Kerrigan

Arc & Co.’s John Kerrigan

To read the full release, please click here

Contact:

John Kerrigan, Director, Structured Finance - Arc & Co. T: +44 (0) 20 3205 2124 E: john@arcandco.com


In the Press:

Property Week:

In the Press:

Europe Real Estate:

Case Study: Arc & Co secure buy-to-let mortgage on complex deal

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Contact: 
Nikita Nigai
Asset Finance Advisor
Arc & Co. Private Finance   

T: +44 (0)20 3205 2122   
E: nikita@arcandco.com

Client: Private employed individual from Kazakhstan

Requirement: Arc & Co. worked on behalf of this private individual to obtain a buy-to-let mortgage for a 1-bedroom new build flat in London and with a value of £825,000. This was a complex deal due to the personal circumstances of the individual and him not having clear proof of income.

Solution: A loan of £457,875 was secured and with a loan-to-value ratio of 55%. This was at a total annual rate of 7.49%, with 2% of this deferred and added to the gross loan amount, therefore achieving an annual rate of 5.49% over a 36-month term. Interest is serviced on a monthly basis and the arrangement fee was added to the gross loan amount.