In light of the recent press coverage highlighting a number of larger loan deals taking place at the moment, Bridging & Commercial sought the insight of Steven Nicholas, Chief Executive at Tiuta Plc...

Whoever said ‘big is beautiful’ was certainly on the money when it comes to the bridging loan sector at present.  We have seen a plethora of loan applications come through Tiuta’s doors recently which could certainly be categorised in the larger bracket.  These have been seven/eight-figure deals which, while not the norm, are certainly much more evident than they have ever been. We are not alone in this. Take a look at some of the deals that have been garnering press attention lately through other lenders, packagers and distributors and you will see they are comfortably over a million pounds.

So, why should this be and how has the bridging sector reacted to this increase demand for larger loan finance? Certainly, the drivers are a combination of factors that are not just attributable to large bridging loans; these include the lack of finance available from other sources, namely the high-street banks, which is why property developers and entrepreneurs are increasingly looking for bridging finance to fund renovations and developments. Then we have a market which has seen falls in property prices and there are bargains to be had, even in the million pound arena. Those holding properties who want to realise their equity quickly are willing to take offers; however quick sales are not often the forte of traditional lenders, which is why we are seeing a sharp increase in bridging finance at these levels.

Of course, not every area is overly abundant with properties valued in the large loan category and certainly our activity has been much localised, particularly in the Mayfair area of London and surrounding conurbations.  In these areas, loans of £15m-£20m are not uncommon; at these levels our due diligence and underwriting work is absolutely vital as is the ability to give a yes or no in double-quick time. The process for larger loans does not differ markedly though, but you will find these eight-figure sum deals do focus the mind of all concerned. And so they should, particularly when they are able to deliver serious value to all stakeholders.

To my mind, the number of large loans we are likely to see through Tiuta’s doors should grow, particularly in that neck of the woods. London has already seen a huge increase in the number of foreign buyers seeing property as a safe haven, and I know full well that developers here are looking for property supply to turn around quickly in order to access that type of buyer.

While we may see an increase in demand, one has to wonder about the bridging sector’s ability to sustain these large loan levels. We recently accessed a specific funding line for large loans, however other specialists will not have this luxury which means some clients will remain disappointed. That said, for those brokers and introducers who are able to source such potential deals we would always be willing to look at the case and take it from there. These deals do tend to be more attractive, the closer to London they are, however this does not rule out other areas of the country.

The fact is that unless you ask, you don’t get an answer, so we would urge all those who are active in the larger loans marketplace to get in touch to see how we can help their clients secure the (large) funds they need.