reflex Property Finance

Who are Reflex Property Finance?




As a business, staying under the radar for longer has its benefits. Taking the decision not to set aggressive growth targets, or spend big on marketing, can allow a company to control the flow of new business, develop processes and nurture its reputation.

This is the approach that Reflex Bridging — which has now rebranded as Reflex Property Finance — has taken over the past five years as it built a loan book, quietly and methodically.

Incorporated on Companies House on 24th June 2011, Reflex is the sister brand of Galliard Homes, a British property developer based in Loughton, Essex. The company made its first loan in 2011 but followed this with only a handful of small loans in the years that followed. It wasn’t until 2016 that the business significantly expanded its lending operation.

Galliard Homes CEO, Stephen Conway, is a respected player in the British real estate market, having moved into property in the eighties after working in banking during the early part of his career. In addition to his leadership role at the developer, Stephen sits on the credit committee of Reflex, alongside legal director David Hirschfield and co-founder Jonathan Morgan (pictured above).

Jonathan is also no stranger to real estate, having been in the property world for two decades. He first worked as an investment agent and then as an acquisition specialist, before building a successful career at Galliard. In recent years, Jonathan has expanded his role within the company to become director of investment and developments.

“For more than 10 years, I have arranged all of the finance for the company across all of its projects,” he told Bridging & Commercial. “I have experienced the debt market from the borrowers’ side. It was always very easy to find finance for a fully-funded scheme, but it was sometimes difficult for sites that weren’t vanilla.” A fully funded scheme is what the banks normally require when providing development finance.

Jonathan quantifies non-vanilla sites as those without planning permission, or where a buyer had completed on a purchase, but didn’t necessarily know what the end plan was. He explained that it was common for lenders to refuse funding for such propositions and, in the instances where finance was offered, it was typically expensive. It was here that he spied an opportunity for Reflex.

Seizing the opportunity

In the early days, loans extended through Reflex were more commonly to clients who had first approached sister company Galliard. These were typically individuals enquiring about potential joint ventures. Galliard has built its business model on such joint ventures, but the first project proposed in 2011 was too small for the finance provider. However, in instances where they spotted a strong lending opportunity, they often decided to lend, despite passing up the JV.

Since then, its loan book has been growing, albeit steadily, currently standing at 41 loans with a value of £91m — but its approach to assessing opportunities has remained focussed on quality.

“Our unique selling point is that we are ‘property people’ first and financiers second,” said Jonathan. “We’re used to being on the other side of the fence, so we don’t ask questions in the same way as bankers do, we ask questions like the property guys that we are.”

“We still do our due diligence, but it’s in a more pragmatic way,” he added. “Our borrowers like dealing with us because we cut through and transact at speed.”

This approach has been generating plenty of interest in Reflex, particularly over the past 12 months. In February, specialist SME lender Recognise Bank announced a new multi-million-pound partnership with Reflex, where it will part fund some of the business’s future loans. 

In the announcement, Recognise stated that it had already provided some £10m in funding for commercial and residential deals alike.

The partnership makes sense. Like Reflex, Recognise Bank has been focussed on developing personal relationships and building a proposition based on quick and efficient transactions.

And Recognise isn’t the only organisation keen to spot the blossoming operation at Reflex, either. The bridging lender also enjoys institutional funding from OakNorth, to the tune of £30m. In addition, Reflex participates in opportunities alongside other lenders where it typically might take a junior position.

But the directors of the business are keen to emphasise that they, too, have skin in the game. To date, the leadership team have personally invested in every facility that has been extended. “It demonstrates to our institutions that we have confidence in the loan,” commented Jonathan. “We are putting our money where our mouth is.”

The final part of the company’s funding equation is the support it enjoys from a host of UHNW investors and titans from the real estate industry — not surprising given the career history of its leadership team.

Investing in the future

So, what next for a business that has enjoyed such success in its formative years? The investment now will be in technology, according to Jonathan, who revealed that it has started developing several enhancements to its platform to give “a smoother ride” to both investors and borrowers.

“Beyond 2022, we want to keep growing the business,” Jonathan added. “We will be more active looking for loans, but we are under absolutely no pressure to do so. We will keep growing, but it will be at our pace.”

Furthermore, the specialist finance provider will continue to seek cheaper sources of capital in order to reduce rates for its borrowers.

Reflex’s co-founder is optimistic that there is a hunger for real estate among investors in the current market. He noted there was a “wall of capital” at institutions and on debt platforms as “lots of people have a target to get money out the door.”

He emphasised the changes in market competition since Reflex started lending. However, it’s not just the competitive landscape that has shifted, it’s also the macroeconomic picture. The emergence of inflationary pressures, more recently, is now something that the Reflex team are keeping a close eye on — particularly in relation to cost estimates.

“You have to be careful about the viability of projects. Borrowers are potentially undercooking the construction costs,” Jonathan warned. 

“If you’re lending on land value, that is the first place to be hit. We will always ask a borrower for their appraisal and sense-check that with our own construction expertise. We will always tailor our lending to what we believe are the true numbers of the project.” 

But, while the sector is shifting, the lender’s management team have taken time out to ensure they are aware of future headwinds. As a challenger whose arrival may have been relatively quiet in the market a decade ago, it seems they are ready to make some noise.

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