PRIVATE FUNDING FOR PROPERTY DEVELOPMENTS
The way developers are typically funding their projects has, for the majority, changed significantly over the last few years. Before the credit crunch banks, mainly UK and Irish, would fund all or most of the project costs and developers would top up the balance with their own equity. In addition you’d find that once a relationship was in place a lender would bend over backwards to compete with other offers and fund future deals with their clients. This often meant developers were borrowing all they needed from one bank, and that bank couldn’t get the money out fast enough. In the wake of the downturn many new mezzanine funds, private equity houses and private debt lenders emerged....................
GREEN SHOOTS IN THE CMBS MARKET
In our Q1 newsletter we spoke of investors holding commercial properties with loans from before the credit crunch. Typically the loans were still being serviced, were still in positive equity positions but many had breached LTV covenants – these factors tended to mean they weren’t priorities for being ‘dealt with’ by lenders and the low lending margins and supressed values from the pre-2008 days meant the borrowers weren’t looking to refinance or sell in any hurry if they didn’t have to. As lending options for the commercial property investor have increased from several mezzanine funds and insurance companies we are also starting to see some CMBS transactions.....................
FUNDING IN LONDON’S ‘NON PRIME’ AREAS
In a seminar in March about the London residential market there seemed to be some conflicting information on the strength of the London property market. One speaker covered prime London areas and suggested that recent price growth and the apparent frenzy of bidders on high value sites suggested we might be nearing the top of the market and in for a crash – and yes they even referred to a ‘bubble’ and all that implies. The very next speaker then talked stats about how we’ve consistently fallen short of the new housing targets..................
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