Henray Capital’s February 2024 Round-Up

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Jenna O'Sullivan - Director // 29/02/2024 // 0 Comments

February’s Specialist Finance Market Overview

It’s been an exciting month for Henray Capital, we have hired our first employee who has joined us as a bridging finance specialist, he has a plethora of bridging experience and diversifies our offering to borrowers.

Across the specialist finance market there seems to be a consensus that rates have stabilised and stretch facilities are being offered on more sites. Lenders are also now more accepting of defaults which 6 months ago they would have refused straight away. There is still volatility within market and risk teams are taking longer to review cases however this also brings with it comfort to the borrower that once offered the deal will proceed.

For our SME developers it’s been a tough year and a half however it seems there is a clearer horizon. Government and action groups are finally working together to bring positive changes in the planning process as well as progress in getting the first time buyer market moving again. There will be a lot of media around policy in the coming months and I am hopeful these promises once delivered will only assist in ensuring our industry keeps growing.

In general end values have held but those borrowers who were too highly leveraged seem to have fallen victim to liquidation due to delays and cost increases. As such we’ve noted the requirement for equity seems to be a priority as our borrowers have been taking advantage of obtaining part complete sites and spreading their equity between multiple projects.

 

Stand out development finance deals

A repeat client of ours was looking for leverage on a BMV purchase at auction where works would be completed to turn a dated MUFB into a modern block and split the titles for sales as individual units. They were looking for both debt and equity. We had some initial concerns over the end values however the borrower had done extensive research which allowed us to present the project to our lenders. Due to tight time frames we ensured that those we approached could move swiftly and support the borrower with deliverable funding.

We were also introduced to a client who had some issues at planning meaning delays and also receivership action on another asset meant they were in breach of their current debt covenants and the lender no longer wished to support the scheme. After a thorough fact find we were able to secure a site visit within days with a new lender who we knew would support the borrower to completion at 65% LTGDV for this heavy refurb project. We are currently instructing professionals and aim to have this project funded by the end of March. The client has been extremely impressed with our swift responses.

A new client for Henray Capital has asked us to look at the development of a designer village outlet centre. It’s an interesting proposal and luckily enough Henray Capital has funded shopping centres previously so we are well placed to get the capital stack for the borrowers as well as facilitate a competitive exit. It’s early days however we’ve had strong interest from both senior and preferred equity partners on this one. Will be a few weeks of travelling to site with the relevant parties to discuss.

One of our local developers asked us to look at senior and junior terms for an 8 units ground up scheme in Essex. The scheme is slightly niche due to the planning requirements that the units must look like industrial barns. We knew these wouldn’t be for all our lenders and so approached a lender we knew would be able to offer and deliver on their funding. They offered 65% LTGDV at a competitive rate of 10.5%. The borrower is looking to action another option agreement and as such only wanted to contribute 5% to the purchase so we approached a sales guarantee to assist with the top up on day 1. We are just in the process of finalising the intercreditor agreement.

 

February 2024 In Summary

In summary, February 2024 has been an active month for Henray Capital. We have travelled to many sites to support our borrowers with their lender meetings and ensure we are fully up to speed with the information surrounding not only the project at hand but also the wider borrower information.

Lenders have acknowledged our in depth packaging which only goes to assist with getting credit approved offers quickly for our borrowers.

We are looking forward to a busy March and always happy to jump on a call or meet for a coffee to discuss your funding requirements email us at [email protected] or phone us on +44 (0) 20 3814 9499.

About the Author Jenna O'Sullivan - Director

Director of Henray Capital

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