Acuitus Finance has linked up with a specialist pension fund backed lender to offer clients two completely different types of property finance. The first facility is a “stretched senior” loan which is designed to be used by property developers, asset managers or bank debt purchasers. It normally provides finance up to 90% of costs which includes senior debt, mezzanine and equity within one facility from one lender. For bank debt purchasers this loan-to-cost percentage can be higher than 90% depending upon the underlying assets and the price paid for the debt. The minimum loan size is £10m and is perfect for experienced asset managers who are looking at either single asset or a portfolio of properties for purchase or refinance where there is the potential to make above average returns. Property developers looking for high loan-to-cost facilities will also find the facility attractive as it allows them to maximise their return on capital or develop a number of projects at the same time. The lender is happy to look at deals throughout the UK mainland.
The second facility is for commercial or mixed-property investors who are looking for an interest only loan over a 5-10 year period, it is a senior debt fund with fixed rates for the duration of the loan. Loans up to 65% LTV are considered with margins from 2.5%, typically the debt service cover is lower than clearing banks. The minimum loan is also £10m for either single assets or portfolios. Interest-only finance for commercial property is very unusual in the current lending marketplace at the low margins on offer from the fund. Falling margins Acuitus Finance has seen interest rate margins falling during the past six months. The most attractive margins from 2% for Government/FTSE 100 covenants through to 2.5% for other commercial and residential investments are normally linked to the value of the loan.
Loans in excess of £5m are attracting the lower margins with loans from £1-5m normally a
0.25%-0.5% more expensive. The lenders do not always offer their lowest rates without some persuasion or influence from a large introducer like Acuitus Finance.
Fast finance The property market has started to heat up considerably during the past six months with clients finding that they have to complete on deals quickly to safeguard them. The number of gazumping scenarios has seen a dramatic increase. Normally, if a deal is well-priced it needs to be secured quickly or you run the risk of someone else jumping in with a higher offer. Acuitus Finance has been assisting clients who need to move quickly with a close partnership with a lender who can perform from start to completion within two weeks which is something that the banks can only dream about. This includes commercial property, residential and development sites with planning permission. If you are trying to buy an asset quickly, please contact Stuart Buchanan. Lock in to low interest rates The Bank of England is now clearly signalling that an increase in interest rates is on the way. Although fixed rates have increased recently they are still a long way below traditional average base rates. It can be attractive for property investors to look at reducing their interest rate risk by either refinancing to completely or partially fix the interest rate on their loan. Interestingly with interest rate margins falling the all in cost today is very similar to the all in cost twelve months ago. Sharia-compliant property finance Acuitus Finance has recently arranged Sharia-compliant finance for refinance and purchases, if you are interested in finding out more about this facility please let me know. Development sites We have a number of clients looking for development sites at the moment, if you are looking to sell a site either with or without planning permission please let me know. A full review of currently available finance can be downloaded here
