Comment
Bridging market is a parade of the tyrekickers
Some 95 bridging lenders operate in the short-term market, but some are simply wasting our time
by Steven McColl, investment partner, Soho Corporate
“Dad, why don’t we launch a bridging fund, loads of people are doing it, it will be a bit of fun, we can build a website, we can pretend to be bankers, we can tell Mum we are hot-shot tycoons, and we can tell our friends that this time next year we are going to be millionaires?” “OK son, let’s do it.”
The Soho Corporate research team engaged last week in an exercise to review the private lending market in the UK. We specifically looked at bridging and short-term finance, as that is the only sector we operate in. The results were astounding. Two years ago we had an active database of 40 to 50 short-term bridging lend- ers, our latest census figure derived us a result of no fewer than 95 private bridging funders. This figure is a massive leap and includes everyone from LMC, West One, Dragonfly, Masthaven, Omni, Lowry etc down to the smallest pri- vate funders that simply have a man, mobile phone, laptop and a pot of cash (sometimes there is an office dog).
UNDER THE RADAR Drilling down into the list, roughly half the lenders are names that most “specialist” brokers will have heard of, the remainder being names that are more niche and below radar.
16 BRIDGING INTRODUCER MARCH 2012
Interestingly some of the below radar names have reasonably signifi- cant short-term loan books of circa £20m, whilst others have books that are still respectable in size, say with £5m out on loan. One such funder informed me recently that the £5m loan book derived him a monthly income of £75,000 before fees. Soho is usually the first to wel- come new private lenders to the market, we are often the earliest enquirers of their services and will quickly check-out what they are of- fering in order that we can ascertain if they are bringing anything new or unique to the table.
TYREKICKERS However, and this is a big however, we are finding more and more that a number of the new lenders are what the motoring trade calls “tyrekick- ers”: no more than guys that will review a case, ask loads of questions, let a deal go to site visit, valuation, legals, then ask some more questions and then say “sorry chaps, not for us” leaving the broker and borrower high and dry. The “tyrekicker syndrome” really means that there is huge value in what a specialist broker and pack- ager can bring to the table. For example at Soho Corporate we only do bridging: we live and breathe it, so we are on top of what is going on in the industry, who is doing deals, who is actually completing deals and which lenders just talk about doing deals. We talk regularly with other brokers and specialist packag- ers, sharing experiences and notes
about the good, the bad and ugly in the sector; this truly is what gives the specialist the edge.
COMPARE THE MARKET It was announced recently that three websites are launching that are a “compare the market” type vehicle for the bridging and short-term sector. The key point that we need bear in mind is that these sites do not have a “tyrekicker” column. They may show that Mr X the bridger will to lend on big farms in Scotland, but does he really? Will he complete the deal? This is truly where the special- ist broker packager will beat the machine, inside knowledge is king. It is important to add though that not all tyrekicker lenders are the small guys. There are big name funders that actively market them- selves as seekers of new business, are prominent members of the trade associations buying themselves respectability - but they too will quote, issue a DIP and go live on a case with limited real intention or possibility of funding the deal. The key point to take into con- sideration here is talk to your peers, share notes on the lenders, talk about the good guys and the bad guys; knowledge is power. Gone are the days of not talking to com- petitors. Forget that: you need their knowledge and they need yours in this market. Things are changing on a week by week and month by month basis in terms of which lend- ers have cash, which don’t, which want to do deals and which want to talk about doing deals.
www.mortgageintroducer.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40