Pluto Finance, a residential development lender, has boosted its current funding lines by securing a second £100 million tranche, this time for its growth plans in 2014.
The lender had already identified a gap in the market for funding larger residential development schemes with a GDV of over £15 million.
To complement its current mezzanine finance offering for smaller projects, under £10 million of total costs, the specialist lender launched a new senior loan product for larger residential development projects back in June 2013.
It has lent £100 million of stretch senior loans over the past six months; the new tranche is in addition to its mezzanine funding.
Pluto provides Stretch Senior Funding, a single loan funding the whole project, and also Mezzanine Funding, which sits behind a traditional senior loan.
The lender estimates around £35 million of funding will go towards mezzanine second charge deals. Pluto’s Stretch Senior Funding, which combines senior and mezzanine debt into a single loan, will work with senior debt lenders, such as Aldermore and Close Brothers.
If the debt requirement for a deal is less than £10 million then Pluto can facilitate mezzanine funding, if the requirement is over that then the lender can provide a blended loan which is a stretch senior and mezzanine facility.
|
CRITERIA
|
Stretch Senior Funding (single loan funding whole project) |
Mezzanine Funding(sits behind traditional senior loan) |
|
Total project costs |
£11m - £33m |
£3m - £11m |
|
Loan size |
£10m - £30m |
£1m - £5m |
|
Max loan to cost |
90% |
90% |
|
Min developer’s equity |
- |
10% |
|
Max LTV |
70% |
70% |
|
Charge |
First |
Second |
|
Planning needed |
Full consent |
Full consent |
|
Locations |
London and The South |
London and The South |
|
Unit types suited |
Flats, family houses, high value houses |
Flats, family houses, high value houses |
|
Developer track record |
Strong |
Strong |
As Pluto completed its first £100 million tranche of funding in six months, B&C asked Andy Blenkinsop, Partner at Pluto Finance, whether the company envisaged a similar speed of take-up for second tranche.
Andy said: “We’ve lent out £100 million of stretch senior loans and have been allocated a second tranche. We don’t act as an intermediary, our huge global fund partners put the funding into our bank, so we are not restricted by any processing of the funds.
“If the total debt requirement is greater than £10 million we will finance up to 90 per cent of costs.”
Criteria
• It will fund stretch senior as the sole lender;
• The principal debt (excluding interest) should not exceed 70 per cent of the GDV;
• No fees, no profit share;
• Interest charged at 16 per cent p.a, minimum nine months on the committed sum;
• Valuation and QS cost to be paid by the client;
• Legal costs in the region of £10,000; and
• Guarantees to be negotiated.
Andy added that the lender has also facilitated funding in Oxford, Bath and Bristol; and is anticipating many more deals around London.
Pluto has completed deals on a mansion block in St John’s Wood, a £12.1 million deal on a 36-home development in West Hampstead, houses in Bishop Stratford, and apartments in Surrey Quays.
Pluto has a team of 12, which includes three partners and four loan origination staff. The firm moved into news offices on Berkeley Street, London, and is looking to hire more staff in line with its growth plans.
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