Arc & Co. Close £13.75m Loan

Matthew Cleave, a senior advisor of the commercial and development team at Arc & Co. recently closed a £13.75m loan on behalf of his client Barry Howard Homes.  An active developer in the East Midlands market for many years, Barry Howard Homes’ latest scheme is an 11 acre site formerly used as allotments.  The prime location which is close to Northampton city centre has now been secured for the development of 139 homes. The immediate surrounding area has already been developed due to the overwhelming demand for new homes in Northampton.

Matthew explains “We have arranged a syndicated peak debt facility to meet the costs of the scheme in line with the proposed phasing by the client. This allows the client to control costs throughout the term of two and a half years.”

See below for the details:

Deal description: Peak debt facility on a syndicated basis for a phased development of 139 houses

Location: Northampton
LTGDV: 85%
Loan: GBP £13.75m
Blended Rate: 9% per annum
Term: 30 months

PCD Club Podcast Interview with Jimmy Baillie of Arc & Co on Property Finance

David: Good morning everyone and welcome. This morning we're recording a podcast with Jimmy Bailey who is from debt finance specialists Arc and Co who are based in Mayfair in London and we've got a few questions today, talking about current state of Prime Residential lending market, about bridging, a whole range of different things, arranging finance for non resident clients. So we'll hope to have an interesting conversation today, good morning Jimmy.

Jimmy: Morning David.

David: So first to kick off, everyone always wants to know about the state of Prime Residential property in London, and from your perspective on the lending side can you give us an overview on the current state the market in London?

Jimmy: It's no secret that obviously this sort of high end residential market in London is a bit flat at the moment, so obviously that does reflect in how the banks look at these transactions.  In terms of the finance market, there's definitely less on the purchase side, but there's a lot on the refinance side and the equity release side. Rates are still low, bank lending rates are still low so it is business as usual and these banks are very keen to lend.

Jimmy: One of the most important things we're finding with these transactions is to make sure that any sort of down valuations in properties don't really hurt the deal from the start, so I think it's very important you have a good relationship with valuers and some of the top valuers in London.  You can quite often get a comment on the value of the property in the way that they see it going before you actually instruct the valuation or even get the deal going, so that does help clients a lot.

These properties are all bespoke in nature, non standard, so where the banks are currently pulling back on loan to value slightly because of the liquidity issues on that end of the market at around 60 to 65 percent loan to value. Good lending rates are available, as long as you get all your ducks in a row, you make sure you're firm on the value of the property at the start, you know it really does solve a lot of issues moving forward.

David: And how to best approach the financing of new build properties. I mean a lot of Asian investors would look at properties in London, for example in Docklands, how would you approach that from financing side?

Jimmy: Yeah, obviously the trick there is that they've got the old assignable contracts situation there, so quite often with lenders nowadays, especially with these new build properties, it's the trick of balancing the actual current market value with the purchase price.  Especially with these types of deals you get an Asian buyer, and the contracts have been flipped the once, twice, maybe three times and then they've got the offer accepted and they come to you at a late stage to arrange finance. So once again the valuation is very important here. We have relationships with a couple of very good private banks who will actually look at the current market value even though the contracts have been assigned a couple of times.

Jimmy: It's important to look at the profile of the client there too. But navigating that is quite important, or once again working closely with the valuers, the relationships we have in London is very important in trying to sidestep those issues. Most high street banks will require you to hold the property for at least six months, so that's quite a restrictive issue, but as long as you do select the right banks and you do make sure you have the valuers lined up before the time, it usually is a problem that we can solve. And we do quite a lot of those at the moment, as you can imagine.

David: So on the broader point of just dealing with non resident investors, as someone who might live in Dubai or Hong Kong buying property in London, are there broader things that you tend to pick up and work with on these clients?

Jimmy: Yeah, we see quite a lot of that. The majority of our clients are all based offshore. The most important thing there is really aligning the clients expectations with that of the reality and the market at the moment. I mean, things change quite a lot in London, so you need to obviously make sure your client is prepared and they understand that.

Jimmy: When you go into some of the local private banks or even the Middle Eastern private banks, with the London branches is, as opposed to the high street banks where they would be more looking at your income and expenditure, with these types of clients we can move it to specialist private banks. They will look at the client as a whole and they will be less focused on your bog standard income and expenditure analysis and they want to look at the whole story, so it creates a lot more flexibility for clients with complex income streams.  They really help and it's important to make sure you go to the right bank for clients like these.

David: I know I can go have a lot of expertise around bridging, I mean how are you seeing the innovation for clients looking at short term financing for their property investments?

Jimmy: Well, this is obviously quite a hot topic at the moment. I mean, the short term bridging market has really has exploded in the last couple of years. I mean, there's so many new entrants into the market you struggle to keep up sometimes. Every month there seems to be a new lender. But, there's a lot of opportunity, and a lot of flexibility and there seems to be a lot of liquidity and a lot of cash in the market looking for good deals. So whereas previously people thought of bridging as a bad name, it's important to know that there are a group of private banks out there who do look at the bridging and who do offer bridging at very good rates.

Jimmy: We've got a couple of private banks who will actually look at bridging for the right client around three percent, three and a half percent all in, something along those lines. It's, for example, you've got banks like HSBC and Barclays pulling out of Russia, some of the Eastern European countries, so you've got clients who've had facilities with private banks like HSBC and Barclays, they've come in off those facilities, they're looking to refinance and their client, for example it could be a Russian client, he's found out, "Oh no, I can't refinance anymore. What do I need to do?" So quite often these cheaper, short term facilities are very useful and this can give the client enough time to either sell the property or refinance elsewhere. So this is obviously quite a useful tool and I think we're seeing more and more people come into this market, especially as it just seems to be more and more competitive as time goes by. And that naturally drives prices down.

Jimmy: So you're seeing private banks coming into that market and they seem to be changing things quite a bit for on the positive side.

David: Great, well thanks Jimmy. If you have clients who are looking at investing in property in London, either new builds or super prime or they're looking at refinancing options, please do reach out. Jimmy, I'm sure, would be delighted to hear from you. So thanks a lot this morning and I appreciate your time.

Arc & Co. Advise on £7.4m Purchase in Kensington

Eugene Tripuk, Head of Russia and CIS desk at Arc & Co. has closed a £4.8m loan on behalf of a Russian client.

Eugene explains "The finance was for a residential property purchase in Kensington for a Russian client with a rubble income deriving from assets in Russia. The main achievement is that we managed to secure a straightforward mortgage from a private bank at a very competitive rate, and we did so, without the requirement to have assets under management. Considering the market is more cautious of Russian clients at the moment, to achieve something like this, is a great result!"  See below for the details:

Deal description: Purchase of property in central London, for a Russian national with Russian Rubble denominated income. No AUM
Location: Kensington, London
Property Value: GBP £7.4m
LTV: 65
Loan: GBP £4.8m
Rate: 1.85%
Term: 5
Client Nationality: Russian

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Sam Le Pard joins the Arc & Co. team

The Arc & Co team continues to expand. Following the arrival of Tom Savill and Jeremy Robinson earlier this year, we now welcome Sam Le Pard to the Commercial and Development team.

Sam joins Arc & Co following three months of training in the Arc & Co. Academy. Sam was previously a trainee solicitor at Freshfields, working in London, Dubai and Singapore and gained a first-class history degree from the University of Nottingham. Sam’s addition enhances the range of skills and experiences in the Arc & Co team.

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Finance for CIS clients

Since the implementation of increased sanctions from the west, clients resident in CIS region countries certainly raise challenges for us when helping them to utilize the full potential of the current credit market.  Weak local CIS currencies, increasingly strict regulation policy and limited appetite from lenders to finance those clients means access to cheaper finance is narrow or non-existent.  Despite this our CIS desk has placed more than £500M in finance.

Arc & Co. is a specialist in assisting CIS clients.  Over the last 10 years we have helped our clients access the best available products in the market tailored to their particular needs in terms of gearing level, pricing and duration whilst taking account of circumstances like nationality, residency, the source of wealth, types of the underlying asset and the client’s income.  During an initial phone call, based on our experience, we can predict what is achievable for the client in the current market conditions. We can assist in cases of short time frame, ongoing loan term expiry, lack of liquidity or the lender particular jurisdiction/asset policy change through to giving advice in cases of debt structuring like refinancing, acquisition financing or equity release.

Arc & Co. - Development Finance Broker of the Year

Last night in the presence of more than 700 industry professionals from leading financial institutions and trade bodies at the prestigious Royal Lancaster London hotel, the winners of the 2018 Business Moneyfacts Awards were announced.

For the second year in a row, Arc & Co. Structured Finance were presented with the Development Finance Broker of the Year award by the evening’s host, Claudia Winkleman.  Thanks to diligent research by Moneyfacts experts, companies and brokers who won, or received highly commended or commended trophies, are considered to be truly the best in class.

Each eligible organisation was scrutinised so that only those who throughout the last 12 months have consistently offered the most competitive products, the highest service levels and shown the greatest innovation in the business and commercial finance world were deemed worthy of the various trophies available.

Lee Tillcock, editor of Business Moneyfacts, said: "Another year of political uncertainty has not stopped the continuing revival in the development finance sector. The last 12 months has proven to be more profitable for many developers and as the appetite for funding grows, brokers and providers have embraced the opportunity to boost trading and growth levels.

Andrew Robinson, Chairman of Arc & Co. said: “it’s an absolute privilege to have won this award for a second year straight.  It reflects the effort, professionalism and hard work of the team over the past 12 months and we hope to be back next year with another strong submission”

Arc & Co. sponsor the first Private Client Dining event of the year

Private wealth industry professionals from London and other major financial centres are set to gather at a prestigious event hosted by the Private Client Dining (PCD) Club at The Churchill hotel in London on March 8, 2018.

 

PCD Club describes itself as the premier business networking club for international private wealth professionals around the globe, and its members include recognized industry-leading figures from the legal, banking, investment management, property and finance sectors.

Professionals in London, who advise high net worth individuals, have been invited to attend PCD Club’s dinner in the city on March 8th.  The event will be attended by professionals including lawyers, accountants, trustees, property advisors, investment managers and private bankers who advise private clients on wealth planning, trusts, retirement planning, tax, succession, investment and other key issues.

David Bell, founder of PCD Club, said: “We are delighted to be back in London next month – our London dinners are always a sell-out and we are expecting over 120 professionals at our first event in the capital this year. This event will be a great opportunity for members to make new connections and to expand their professional network and referral sources on an international basis.”

Andrew Robinson, CEO of Arc & Co, added: “Arc & Co is delighted to sponsor the first PCD Club dinner of the year. We have had a long association with the network and have derived business benefit from our membership over this period of time. Sponsorship enables us to amplify our message to a large audience of professionals in a very targeted and efficient way.”

The beginning of March and another new team member

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Following the arrival of Jeremy in January we are pushing ahead with our plans for growth and skills diversity with the addition of Tom Savill to the Structured and Development team.

Tom joins Arc & Co. having spent the past 6 months on our training program. Tom gained a Bachelor’s degree in business from the university of Oxford Brookes and uses the valuable skills gained from past experiences to aid and enhance the Commercial and Development team.

Arc&Co. successfully advise on the finance of 50 meter Codecasa

Leon Batchelor, Managing Director of Arc & Co. Marine and Aviation has sucessfully adviced on the finance on a 50 meter Codecasa Yacht on behalf of a Middle Eastern Client.

Please see below for details:

Client: Middle Eastern
Yacht: 50 meter Codecasa
Loan to value: 50%
Term: 5 Years
Structure: 'pure' yacht mortgage without private banking

Photo credit: Codecasa Shipyards

Codecasa Shipyards, established in Viareggio back in 1825 by the shipwright Giovanni Battista Codecasa, are an absolutely prominent reality in the luxury yachting industry and are known all over the world as builders of steel and light alloy motoryachts, ranging from 30 to 70 meters LOA.

Still run by the founder’s heirs, nowadays the Codecasa Shipyards Group is able to offer a wide range of Yachts, featured by top quality, technologic innovation, reliability, design and comfort.

Lending Focus Seminar

It’s always a privilege when a team member is called upon to give his opinion on the finance market.  Taylor Wessing’s ‘Lending Focus’ series of seminars has experts from across the Taylor Wessing network presenting on a range of hot topics and market updates.  This week saw Edward Horn-Smith as the guest speaker giving a presentation entitled ‘Trends, Terms and Tensions for the mezzanine finance market’ at Taylor Wessing’s New Street Square offices in London.