You’ve set out to bring institutional-quality deals to retail investors. Why do you want to do this and why do retail investors not already have this access?
We are trying to bring a robust, institutional investment framework to a market that has not historically been very institutional — namely, UK residential real estate development.
We believe that investors deserve a higher quality of information and diligence on these types of investments.
We are doing this because we believe that by putting all of our deals through a rigorous, private equity-like due diligence process, we have the ability to deliver attractive returns to our investors in the most transparent way, while becoming a long-term funding partner of choice for residential property developers across the UK.
I should point out that we do not currently offer retail investors access to the credit side of our deals yet, but we very much hope to find a way to do this over the coming 12–18 months. That said, on the equity side, we have developed the Hilltop Equity Rolodex, which is for sophisticated and accredited investors, where the minimum investment is £100,000.
- DFT roundtable: Reliable lenders, changing student demands and planning benefits in the PBSA market
- How to get the best deal on development finance
- Underwriting your professional team: a best practice approach
Do you feel that it’s more effective for developers to use a one-stop funder than piecing together funding from different parties? If so, why?
It can be a frustrating, time-consuming process for developers to piece together senior debt, mezzanine debt and third-party equity. One needs to deal with inter-creditor agreements, multiple sets of legals and potentially additional reports from valuers and surveyors. Not to mention the risk that, after months of work, one piece of the capital stack pulls out, jeopardising the entire transaction.
Our funding model is very similar to a private equity model, where we are effectively backing the management team with a view to a successful exit and where interests are aligned between us and the management team to achieve targets.
So, in essence, we provide a ‘one-stop shop’ for up to 90% of project funding, resulting in a simpler, faster, more certain process for the developer. Also, in some cases, we are able to arrange a portion of the equity finance for the developer through our Hilltop Equity Rolodex.
What one thing would you like to change about the property development industry?
Get rid of some of the less-than-scrupulous actors. It is depressing to watch and gives the industry a bad name.
How did you get into the industry?
I spent 20 years as an investment banker and institutional investor, working for large hedge funds and private equity groups.
I wanted to apply the skills I’d acquired on Wall Street to help build an interesting business that was serving a real unmet need in the market.
The opportunity to partner with Paul Oberschneider and Round Hill Capital was too good to pass up. Round Hill is one of the most successful residential-focused real estate asset managers and development investors in Europe.
If you weren’t investing in UK property markets, what would you be doing?
Investing in some other market where I saw attractive opportunities. And helping my brother manage his award-winning restaurant empire.