According to its annual year end and market review, the company has seen a 27% increase in average loan amounts and a 24% rise in completed cases between July 2021 and June 2022.

Andrew Robinson, CEO at Arc & Co (pictured above), stated that 75% of the deals were from existing clients who had boosted their scheme and loan sizes, which also impacted deal volume as clients refinanced and broadened their portfolios.

Additionally, Arc & Co developed a number of partnerships over the year, including those with London Belgravia Brokers and Amber Lion Partners, following its team expansion, enabling a higher number of loans to be completed.

Andrew said the number of lenders the company used was a reflection on the liquidity and surge of lenders in the market.

Residential development

According to Arc & Co, the residential development sector has been driven by high liquidity, subsequently “driving down price and increasing risk appetite from lenders,” the review claimed.

In addition, the uptick in green products has also impacted pricing.

The report stated the mortgage market’s assertiveness had helped to build confidence in the market, while institutions and professional landlords targeted portfolio purchases from developers due to rental inflation.

However, with global events beginning to effect confidence, supply chains, and material price inflation, the debt adviser warned that lenders were starting to look at higher equity contributions.

Over the next year, Arc & Co envisages developers using more structured debt and equity deals over high-leverage senior debt.

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Residential investment

The review revealed that as well as completing £28.5m of residential investment loans, Arc & Co has seen many deals for large BTL portfolios, which are seen “by both lenders and property professionals as a stable and secure alternative investment to commercial real estate”.

However, the recent hike in cost of funding is starting to show as interest cover ratios have to be met, leading to lower loan amounts.

As reported by the evaluation, rental inflation will help the loan amount, and the business is expecting a jump in portfolio purchases as investors look for steadiness while the commercial property market is still perceived as uncertain and the equity markets become volatile.

Commercial loans

Some £85.5m of commercial loans arranged over the past year is a sign that confidence in post-pandemic trading has increased lending appetite, bringing liquidity back to the market.

Arc & Co carried out refinancing where the assets, such as hotels and student accommodation, have “now increased and stabilised their operating income after the pandemic and clients are looking to recapitalise their assets”.

Bridging and repositioning

While completing £225m of bridging and repositioning loans, Arc & Co has been concentrating on development exit loans, land acquisitions while developers value engineer sites, and the refinancing of land loans due to the delay in planning permissions been granted.

The majority of repositioning loans arranged by Arc & Co over the past 12 months were typically provided to enable operational commercial assets to re-stabilise after the pandemic.

“In the year ahead, we are expecting bridging to be a large part of our book, especially as sales are starting to take longer and inflation on material price is having a negative effect on contractors, which means developers are land banking until the market stabilises,” the review noted.