Ellis revealed to Development Finance Today that the lender was interested in the secondary market, claiming that acquiring loan books was an efficient way of deploying significant cash on day one, as opposed to ground up development which occurs slowly over time.
Maslow likes doing bigger transactions where possible.
“If you aren’t cash constrained, you’d be going for the bigger ticket deals and in our experience the secondary portfolios we have undertaken due diligence on are substantial in aggregate."
He explained that a benefit was that some of the construction risk in secondary portfolios had passed.
“These portfolios often contain assets that are out the ground, where the super structure is up and the remaining funding is needed to achieve practical completion as opposed to starting from the beginning.
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"In our business, ‘in the ground’ is where most of the risk sits."
Ellis mentioned that a loan book may be available for a whole host of reasons.
These can include:
- end of life — five- to seven-year funds that have reached their end of life and require money to be returned to investors
- administrators have been appointed — incomplete properties requiring completion finance to bring them to fruition
- funders require liquidity — funders may wish to sell their loans as a means of funding their future funding commitments
The development finance lender made its first entry into the secondary market last year, with the acquisition of a £100m loan portfolio.
The portfolio included more than 438,000 sq ft of new residential, mixed-used and PBSA schemes which were set to be delivered across the UK.
“We’re very much set up to acquire and service complex portfolios.”