Martin's Mailbox: Resi, steady, go...

Martin's Mailbox: Resi, steady, go...


Eschewing the usual conference centre favourites of London and Birmingham for decidedly un-cosmopolitan south Wales, RESI 2012 last week gathered the great and good of the residential property market for its annual shindig.

Located at the impressive Celtic Manor hotel and golf resort in Newport, RESI provides an opportunity for the industry to debate and discuss what’s hot and what’s not for developers, investors and speculators. It’s an impressive event – slick, sleek and professional.

Travelling down early last Thursday with my colleague Bob Sturges, we wanted to hear first-hand what the conference had to say about funding and the role of lenders, both mainstream and specialist. We also had a bit of local interest in that Nick Candy, CEO of Candy & Candy, was appearing on one of the conference speaker panels.

One entire session was devoted to funding. Speakers included representatives from Barclays (boo, hiss!), Deutsche Bank and a number of other institutions. Barclays spoke glowingly about the value it places on ‘long-term client relationships’ but offered little more than platitudes and PR fluff. DB and the others spoke more openly and convincingly about the pressures on their ability to lend.

The problem, they said, is threefold: scarcity of capital; ongoing concerns about the health of capital markets; and regulatory pressures. These make it more difficult and expensive for developers to borrow, and easier for the banks to cherry-pick their clients and/or projects to finance. They also acknowledged that nothing was about to change – and I quote – ‘anytime soon.’

Nothing new here, but what did surprise Bob and I was the lack of discussion as regards alternative forms of funding. Bridging wasn’t mentioned at all. Nor were mezzanine finance or other more exotic types of asset-backed lending. The speakers acknowledged the emergence of new foreign-owned banks – mainly from the Far East – but that was about it.

From this it wasn’t difficult to conclude that bridging as a serious and viable alternative source of liquidity still isn’t registering on the radars of most residential property specialists. While possibly true at the highest level I’m not sure it’s the case throughout the sector, as evidenced by a couple of meetings with had on the day.

Pre-arranged, we met a number of professional developers and investors keen to explore the opportunities offered by the new generation of short-term lenders, such as Omni Capital. They were particularly interested in understanding how deals are structured, on what broad terms, and how best to access lenders. It was also clear they place great stock on a lender’s funding credentials and how it stands up to close scrutiny. All very interesting.

Bob and I were also surprised by the almost complete absence of the mortgage/bridging trade press. I say ‘almost’ as honourable mention must go to Bridging & Commercial, the esteemable hosts of this column, who were elegantly represented by Caron Schreuder and Alex Jones. I’m sure their reports will make essential reading. But where were the rest to help spread the bridging gospel?

For any ambitious bridging brokers of scale reading this blog, I recommend making space now in your diaries for RESI 2013. Places are limited and go quickly, but it could be one of the more rewarding events you attend next year.

Finally, my thanks to Montagu Evans for their gracious invitation to join them for lunch at Celtic Manor’s Clubhouse Lodge. Bathed in glorious early-autumn sunshine, we enjoyed drinks and canapés on a balcony with sweeping views across the strangely deserted but immaculate golf course.

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