Iron Bridge Finance

Is this mezzanine lender the market's best kept secret?



At a time when pure mezzanine finance has made a mighty comeback, Development Finance Today decided to visit the offices of seemingly under-the-radar lender Iron Bridge Finance to see how it was contributing to the revival.

Iron Bridge – named, quite simply, after the building it resides in and the gigantic iron bridge visible from the windows of its offices in leafy Primrose Hill – is a specialist mezzanine and development finance lender that has quietly been making an impact beneath the surface of a vocal property development market.

Launched three years ago by CEO Lance Joseph (pictured above, left), alongside COO Simon Pollins, the self-funded financier is backed by real experience – from those who understand the mindset of a developer.

Lance – who previously helped grow his father’s building trade supplier business GET GROUP into an award-winning public company with a 300-strong UK team and a 1.8 million sq ft factory base in China – truly recognises what goes on behind the scenes when building.

Having dealt with the likes of architects, specifiers, contractors, housing associations, builders and electricians, Lance was able to get an insight into the building trade before the company was sold in 2007. However, Lance’s fortuitous life lessons came courtesy of his mentors and it is those experiences which helped shape the backbone of Iron Bridge.

“We always believed in teamwork, it’s not about ‘I’, it’s always about the team,” Lance explained.

Iron Bridge Finance

“Having been a CEO to a public company, you have to get shareholders to have confidence in you.

“You have to run teams, you have to do things professionally and be properly accountable … a lot of that learning experience we have instilled in Iron Bridge.”

With a team now standing at eight, Iron Bridge made headlines in July this year after appointing former Fortwell director Martin Gilsenan (pictured top, right) to lead the group’s ambitious sales programme as its new director of sales.

“The relationships Iron Bridge has with the senior lenders was central for my decision to join,” said Martin.

“…The need for mezzanine is greater than ever, and it’s a need that is expressed not just through developers, not just through brokers, who want to understand more about mezzanine, but it’s actually coming from a lot of the senior lenders themselves, because it’s the mezzanine piece that’s the missing link in the capital stack.”

Iron Bridge describes mezzanine as “cheap equity” that allows the developer to make more profit.

Highlights of its mezzanine product include being able to pay it off in full after six months and it’s non-compounding interest calculation.

“We were the first to market a non-compounding mezzanine product, so someone can work out our cost rate quickly and, therefore, they can work out their profit very, very quickly,” claimed Lance.

“In fact, we map that out for them on day one.

“We simply de-mystified how we calculate interest, made it simple and easy for people to understand, so they know what their profit is going to be and that’s how we differentiate from those that have gone by.”

The lender’s bridge-to-mezzanine product also enables developers to deal with just one set of paper work and no repeat fees.

“One thing that we set out is very limited, minimal paperwork requirements,” Lance added.

“So, for example, when someone comes in for an enquiry for mezzanine, the benefits for the broker is we don’t ask for any information beyond what they have given to the senior lender.

“There are no extra forms.

“We can then map out for them very clearly what the senior and the mezzanine costs would be so they can have a blended rate for their finance.”

Iron Bridge’s solid relationships with the senior lenders it sits behind has also played a huge part in its success.

“We are very honoured that we get good referral from the seniors, which means they trust us,” Lance commented.

Lance explained that working with the right senior lender meant getting to the bottom of issues speedily.

“…Inexperienced people can stop someone getting funding.

“So, if you work with professional people who understand the market, understand the products and understand developments, there is a much stronger chance for a developer to get the funding, which is what you want at the end of the day.”

Martin said a lack of understanding of mezzanine finance among the broker market was one of the biggest issues.

“Mezzanine might not be required by every developer on every deal,” explained Martin, “but senior lenders don’t look like increasing their loan-to-GDV anytime soon - that is why we believe mezzanine is here to stay.” 

Iron Bridge Finance

 


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