How do you differentiate yourself from the mainstream lenders market?

We tend to differentiate ourselves by focusing on situations where certainty, speed and flexibility are more important than a standardised credit process.  We are a team of property professionals each with over 20 years of experience of direct property investment and development.  We therefore have considerable in-house expertise which allows us to underwrite and execute transactions extremely efficiently.  We also lend our own shareholder capital, which allows us to be very nimble in our decision making.

Mainstream lenders remain very important to the market, but they are often constrained by policy, concentration limits, sector appetite, internal valuation requirements and committee timetables. As a non-bank lender, we are able to look more closely at the specific facts of a transaction: the asset, the borrower’s position, the exit route, the security package and the commercial rationale for the loan.

Our strongest area is typically bridging and special situations, where there may be a timing issue, a refinance requirement, an asset management plan, a planning angle, a broken sale process, a maturity event, or simply a need for a lender who can engage quickly with a more complex set of circumstances. We are not trying to replace mainstream finance; we are usually most relevant where mainstream finance is either unavailable, too slow, or not yet appropriate for the borrower’s position.

Generally what sort of equity return are you seeking?

We are primarily a lender rather than an equity investor (although we would say we act more like an equity partner than a lender), so we tend to think first in terms of risk-adjusted debt returns rather than conventional equity returns. That said, the return requirement is always driven by the risk, leverage, liquidity, asset quality, complexity and strength of the exit.

For lower-risk, well-secured bridging opportunities with clear exits, pricing can be more competitive. Where the situation is more complex — for example where there is execution risk, a challenged refinancing, a distressed or time-sensitive element, or a heavier asset management component — the required return naturally needs to reflect that additional risk.

The key point is that we are not looking for theoretical upside at the expense of downside protection. We are focused on transactions where the risk is properly understood, the security position is robust, and the return is proportionate to the complexity of the situation.

We would describe ourselves as an “early to mid-teens” returns (%) business (including interest rate and fees).

Development finance is generally difficult at the moment, do you see this as an area of opportunity?

Development finance is certainly difficult at the moment, and we would be cautious about describing it as a broad opportunity. The combination of build cost uncertainty, planning delays, slower sales rates, viability pressure, funding cost and valuation sensitivity has made the sector much harder to underwrite.  There are many specialist development lenders out there, but they come at a price, which adds to the pressure on viability.

We are less active in ground-up development finance than in bridging and special situations. That is a deliberate choice. In the current market, development risk can be difficult to price unless the fundamentals are particularly strong: experienced sponsor, sensible leverage, realistic cost plan, clear demand, strong professional team and credible contingency.

There may be selective opportunities, particularly where a scheme is substantially de-risked, close to completion, well located, or where our capital is being used to solve a specific short-term issue rather than fund the entire development risk. But as a general theme, we see more attractive risk-adjusted opportunities in transitional assets, refinancing situations, bridging loans and special situations than in conventional development finance.

Ultimately our feeling is that land and existing buildings value expectations need to reduce in order to increase the viability and therefore deliverability of projects.

In the next 12 months do you see credit conditions improving?

We would expect credit conditions to improve gradually rather than dramatically. The market has already adjusted to a higher-rate environment, but lenders remain selective and borrowers are still dealing with the consequences of higher finance costs, lower liquidity in some investment markets and more cautious valuations.

If interest rates continue to stabilise or move lower, that should help sentiment and improve refinancing options. However, we do not expect a wholesale return to the very loose credit conditions seen in previous cycles. Mainstream lenders are likely to remain disciplined, particularly around leverage, interest cover, asset quality and sponsor strength.

For non-bank lenders, that creates a continued role. Borrowers may still need flexible capital to bridge timing gaps, refinance existing debt, unlock sales, complete asset management plans or deal with more complex situations. So while conditions may improve, we think the market will remain selective, and the best opportunities will be in transactions where there is a clear plan, strong security and a realistic exit.