Navigating Success: Henray Capital’s November 2023 Round-Up in Property Development Finance

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Jenna O'Sullivan - Director // 30/11/2023 // 0 Comments

Market Trends and Confidence

As November wraps up, it’s an opportune moment to reflect on the latest developments in the property finance sector. Indeed, November 2023 has been a month of promising shifts, marked by decreasing swap rates and a resurgence in market confidence. Furthermore, government discussions on changes in Permitted Development (PD) rights suggest potential benefits, particularly for acquisitions below market value.

 

Valuations and Lender Flexibility

The data on selling prices continues to be a bright spot, showing a year-on-year increase. However, the seasonality of November and December, historically characterized by a slowdown in completions, remains a factor to be mindful of. Interestingly, valuation trends have seen a downturn, but lenders are showing flexibility. They are open to reassessing these figures if backed by robust comparative evidence. This commercial mindset is echoed by industry leaders like Savills, who project a significant upward trend in house prices over the next three years.

 

Opportunities in Development Finance

In the realm of specialist development finance, the opportunities are still abundant. Attractive funding options are available at high Loan-to-Cost (LTC) and Loan-to-Value (LTV) ratios. Moreover, in general, the sector is still offering great prospects.

 

Henray Capital’s Diverse Month

For Henray Capital, this month has been diverse and dynamic. Our team evaluated a range of deals from light refurbishment loans to extensive Purpose-Built Student Accommodation (PBSA) funding.

Notably, projects include a semi-commercial refinancing, a full commercial development, two development exits, and a significant Build-to-Rent scheme.

 

Case Studies and Success Stories

  1. Semi-Commercial Refinancing
    A client transitioning from a bridging loan to development phase for a semi-commercial property, with terms structured at 70% Loan-to-Gross Development Value (LTGDV) complemented by private equity of around £120k.
  2. Commercial Development
    A full-scale commercial development backed by a solid pre-let covenant, with financing terms at 65% LTGDV.
  3. Development Exits
    Two strategic exits involving high-value London flats and a nearly completed development site. Each project required tailored funding solutions to maximize value and efficiency.
  4. Major Build-to-Rent Scheme
    In advanced discussions for phase 2 funding of a large 175-unit project, Henray Capital has secured competitive terms at 12%, including a potential forward purchase agreement.

 

These varied engagements underscore Henray Capital’s versatility and commitment to providing tailored solutions in a changing landscape. Our focus remains on identifying and leveraging opportunities that align with our clients’ unique needs and market dynamics, ensuring their ventures are not just successful but also future-proof.

About the Author Jenna O'Sullivan - Director

Director of Henray Capital

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