New Alternative Lenders Grab £5B Opportunity As Clearing Banks Stand Back From Resi Plays
New names are debuting or making renewed pushes in the debt market. Between them they aim to create a £5B-plus loan book, reckoning that 2021 will be a pivotal moment for a raft of residential products from co-living and build to rent to retirement living and purpose-built student accommodation.
Alternative lenders are stepping in to replace the clearing banks.
Who are the men and women taking a chance on alternative resi lending? Bisnow has the names.
Précis Capital, a UK development lending platform backed by TowerBrook Capital Partners, is targeting the residential sector including build for sale, BTR, retirement living, co-living and student spaces, with a view to providing up to £1B of development financing a year.
Précis Capital is led by its three co-founders, Randeesh and Daljit Sandhu and Karen Dunstan, an experienced real estate finance lawyer who will act as general counsel. Randeesh and Daljit pioneered the non-bank lending sector’s emergence as a vital source of capital for the UK real estate industry following the 2008 financial crisis. As co-founders of real estate financier and asset manager Urban Exposure, they extended approximately £2B of development financing from 2010 onward.
“A chronic funding shortfall has been among the biggest contributory factors to the structural imbalance within the UK housing market we are seeing today,” Précis Capital co-founder and CEO Randeesh Sandhu said.
A total of £300M loan repayments opened the door to a £600M surge in new lending for specialist residential development debt provider Pluto Finance.
The aim is to diversify into bridge loans, particularly for development exits, land with residential consents and office-to-residential conversion in city centres.
Pluto Finance has already closed two large development exit bridge loans in Wembley and Ruislip and it wants more. Pluto will facilitate sub-£5M bridge loans with a preference for ticket sizes of £5M to £35M.
“Pluto was able to achieve 65% loan to value against new build residential buildings with no income, at margins of sub-4.5%. We welcome the opportunity to structure many more similar £10M-plus development exit bridge loans,” Pluto Finance Associate Partner Mario Ioannides said.
Recent deals include a £34M PBSA development loan for the Bricks Group. This will help complete a 706-bed scheme over four blocks in Swansea.
U.S. private equity giant Oaktree has backed new development lending platform Silbury, targeting the retirement/senior living and PBSA sectors along with traditional flatted schemes, multi-phase housing plots and PRS.
The target is to preside over as much as £3B of lending over the next six years, with £500M in the wall-planner for 2021. The platform will underwrite senior loans typically in the £10M to £150M range with a loan-to-value ratio between 60% and 70%.
Last month Silbury agreed its debut deal and a joint venture between Audley Group, Schroders Real Estate and Octopus Real Estate has completed on a £47M retirement village in Surrey.
The development finance facility with Silbury Finance will provide a 26-month loan for the 74-apartment scheme at Cobham, Property Week reported.
Silbury was founded by Matthew Pritchard, formerly head of European real estate debt at Man Group, and Gavin Eustace, formerly head of residential development at Octopus Real Estate.