Areas of Finance
Historically the majority of financing for property transactions in the UK has been
from the high street clearing banks. Since 2007 these banks in the UK
have significantly reduced their lending on property assets, particularly in the
riskier areas of development financing and higher loan to value debt.
This has opened the markets to a plethora of alternative lenders, debt funds, private equity lenders and
pension funds who are filling the space left by the change in strategy and regulatory requirements of the high
street banks. The property financing market is therefore very fragmented which means there are a multitude
of products on the market but it can be hard to navigate all the options and find, or even be aware of the
best option for you.
This is where Gaba Principle can help through our excellent relationships with a huge variety of lenders, from those that cap their lending at £5m to those whose minimum loan size is £50m, combined with our extensive knowledge of the ever changing market means we can find you the best solution for you, your asset and your circumstances.
The changes in the real estate financing market means developers and investors have had to adapt their business models, especially their approach to financing. We are fully up to date with the changing market and use our understanding and experience in the sector and our relationships with funders in order to source and structure finance to suit your requirements.
Types of Funding that we source are:
The Real Estate Asset Classes that we support are:
- Industrial/ warehouses
International Buyers – Residential and Commercial
We specialise in finding funding solutions for investors who are not UK citizens and are not resident in the UK with many of our clients come from Singapore, Hong Kong, Malaysia, Thailand and Dubai. Many of our clients come from Malaysia, China, Singapore the United States of America and other parts of the world. This can make the Know Your Client (KYC) and Anti Money Laundering (AML) requirements of the bank more complex and not all lenders will lend to a borrower who is not UK resident but this is an area we are well versed in and therefore can find the best financing solution for you.
We source commercial finance for all types of real estate assets including the acquisition and refinance of offices, hotels, logistics, student accommodation, build-to- rent, warehouses, shopping centres and retail parks. We will scour the market and engage our relationships to find the best solution for you.
There are many conditions that need to be met prior drawing down commercial finance and we guide you though the whole process to make it as efficient and easy as possible.
In terms of repayment the loans can be interest only with a ‘bullet’ repayment of the debt at the end of the facility term or amortising ie an agreed amount of the loan is paid back every month.
Senior finance: This takes a first legal charge on the real estate asset and is normally the biggest and relatively least expensive slice of debt. For many transactions only Senior financing is needed.
Whole loan/ Unitranche/ Stretched Senior: These terms essentially mean the same. This is where one lender is providing both Senior and Mezzanine finance (see below) in one loan. The loan to value will be higher than Senior financing and the rate will be one rate which is a blend of an element of Senior debt and some Mezzanine debt. It has the advantage that there is only one facility to manage and one lender which can be more efficient for financing and legal fees too. These loans take a first charge over the asset.
Residential Investment Finance & Buy to Let
We can source the best buy to let products including for portfolios for your buy to let investments. The proposal we make will be absolutely based on us listening to your needs and requirements. There are many reasons that it is currently beneficial to hold UK property investments in a limited company rather than in your own name and this reasoning has increased since further tax changes in the UK*.
A Bridging Loan is a short-term finance, normally up to a 12 month term. It is most frequently used to acquire a property and thus secure the deal whilst other factors are put in place to refinance into longer term finance or development finance.
If the project is going to require development funding we have several lenders that will do a land loan (really a bridge) which then converts into a development loan when the conditions eg full planning permission, have been met. This is normally a more efficient and cost effective way of financing a development project than taking out a separate bridge.
A bridging loan will take a first charge on the asset. Generally the higher the loan to value required the higher the financing costs. Bridge loan to values can reach 80% of the assets market value.
We source finance for all sectors of property development, including residential developments, student accommodation, hotels and commercial units.
Development finance will fund part of the purchase of a site and then fund the construction costs and professional fees as the work is completed and valued monthly (or more frequently) by the banks Quantity Surveyor.
Having sourced finance for our own projects and managed the whole process from identifying the best lender, arranging the facility and meeting all the conditions to monthly drawdowns though the life of the project and repayment of the debt we are ideally placed to help you thorough all stages of the lifecycle of a development loan.
Refurbishment finance is similar to development finance but where only a refurbishment of the property is needed rather than a full scale development. The process is very similar but quicker to implement as the scale and thus the lenders requirements are less onerous.
Mezzanine debt sits above Senior debt in the capital structure and has a second charge on the real estate asset behind the first charge of the senior lender.
Mezzanine debt is needed where a higher leverage is required for financing an asset and a Senior plus Mezzanine solution is preferred to a Whole loan. Given where they sit in the capital structure with reduced security the cost of a Mezzanine loan is significantly more than that of Senior Debt.
Mezzanine debt can also sit behind development finance.
Joint Venture and Equity
We can also source joint venture partners and equity investors for projects. Especially for development projects it is common that there is a ‘hands on’ developer who finds the project, puts together the deal and manages the operational side of the project from the construction work right though to branding and sales but does not have all the capital required for the project.
This is where we can source a joint venture partner or equity for the project. This partner can bring the capital needed to ensure the project can happen and often brings other expertise that the developer can find helpful from past projects.
397 Jalan Besar, #02-01, Singapore 209007
Singapore tel & WhatsApp: +65 9018 3727
UK Tel: +44 7932 085670