The market crash of 2008 radically changed the real estate market. Funding options nosedived, too. The knock-on effect made developers and investors cautious about relying on banks. Is it any wonder that bankers are now less popular than politicians?
Their failings include: lack of understanding, loss of the personal touch, inability to make decisions without layers of bureaucracy and no guarantees of positive results and complex lending models.
The list is endless, the world of finance has been on an uncomfortable rollercoaster ride.
At Pinnacle, we’ve endured the turbulence with our constant focus on providing a world class service. Where others see complexities, we find the solutions.
We’ve arranged more than a quarter of a billion of development and investment loans for our clients in recent years.
We have total understanding of ‘both sides of the desk’. This allows us to help borrowers in a unique way.
Selective lenders have appointed us as trusted partners to their businesses. The result? We guarantee to deliver a service of excellence to borrowers.
The market is currently vibrant and opportunities for both developments and investment portfolios show little signs of slowing.
The result of the June 2016 Brexit vote has seen a significant shift in lenders attitudes. Added to this, as of January 2017, the regulator PRA have introduced new guidelines regarding the capital that banks and other lenders need to hold on their balance sheets against development loans. This is having a significant effect on costs of funds and has seen rates increase. We are ideally positioned to take advantage of these moving factors and will continue to guide our clients towards the best deals for them.
Examples of Deals Completed
Residential Investment Project
Substantial portfolio of residential units with combined valuation of £98 million.
Refinanced to take out existing (expiring) loan of £43 million held by one of the UK High Street banks. Broad mix of London properties. 5-year term with option to extend for further 5 years. Fixed rate interest-only facility at 4.99% for initial 5 years. Option to extend for 5 years at 4% over LIBOR or re-fixed on 5th anniversary at a future 5-year fixed rate. Interest-only facility with flexible option to repay up to 10% p.a., penalty free.
Residential Development Scheme
Option to ‘term out’ the facility – ability to switch to an investment loan upon completion at 60 of GDV. This assumes rental income providing a minimum of 1.5x interest cover.
£6.1m loan secured against a single substantial residential unit in Wimbledon.
18-month facility with interest rolled during the term.
Arrangement fee of 1.5% with fixed interest term loan (drawn against certificates during the build) at 6.5%.
A mixed use portfolio where each of the properties contained commercial and residential units, let on standard ASTs on upper floors. Overall loan of £10.3m. Secured against a valuation of £22.3m on an interest-only basis. Fixed rate of 6.85% over 5-year term. Unrestricted amortization with a final early redemption charge (ERC) of 1%.
Mixed-use scheme based in North West of England. Pre-let commercial units to grade A tenants with some residential aspect. Blended rate of 6.5% during construction. Arrangement fee of 2% with flexible option fee (subject to refinancing options) ranging from 0-2%.