Arbuthnot Latham: From purchase to portfolio

By David Craik 5th October 2022

The challenges of inflation and rising interest rates are making it an uncertain time for developers, but private and commercial bank Arbuthnot Latham’s “For business. For family. For life” philosophy is helping to support developers achieve their real estate goals.

Through its Real Estate Finance team and short-term property lending subsidiary, Arbuthnot Specialist Finance (ASFL), Arbuthnot Latham takes a ‘holistic’ approach, supporting property professionals at every stage, from concept, to a fully flourishing development exit and beyond.

The journey begins with the group’s bridging specialist ASFL. Its primary business is residential finance, offering maximum LTVs of up to 75% on loans from £30,000.

Other core areas are light refurbishment and development finance which provide a maximum LTV of up to 70% and maximum GDV of up to 70%, respectively. Its development loan sweet spot is up to £3million.

The start of the journey

“Often we get approached by a property developer with an idea in their heads, a piece of land they have bought, and a certainty that they can get the necessary planning,” explains Matthew Anderson, Head of Sales at ASFL.

“We can help them get the bridge they need and the development finance loan if they choose to go further with us.

In addition, it can be an extremely attractive option for both the developer and our business when we explain that after the first stage is completed, another part of the bank can help them with both the exit and other banking needs.”

Arbuthnot Latham’s Real Estate team, led by Head of Commercial Banking & Real Estate Finance, Tony Eden, covers asset classes within residential, commercial, investment, and development.

Opportunities include residential investment portfolios/buy-to-let in own name or SPVs and licensed good quality Houses of Multiple Occupation (HMOs).

The Real Estate team covers anything from two- to three-house development schemes with £500,000 to £3 million GDV to much larger projects – for example, a current 300-bed co-living scheme with a £55 million GDV.

The ASFL team helps developers exit and sell their projects following completion, and the Real Estate Finance team allows for projects to be retained as a portfolio by taking advantage of Arbuthnot Latham’s banking services and catering to Build to Rent (BTR) type development, for example.

The Real Estate team also looks at buy-to-let property investments, with the bank offering commercial buy-to-let mortgages for individuals and businesses.

Helping developers from plan to exit

“Even from the first stage, I can see in advance if there is an opportunity for Tony’s team – if there is a clearly defined development programme and budget, as well as any potential future income and value.

I always think about how I can help this client going forward and not take just an insular look at the bridge. The exit is always the key,” explains Anderson.

“To start thinking about the future very early in the project is quite a strong sales point to a potential client.

Sometimes when we talk to bridging clients about whether they have considered us for development, exits, and the investment route, they do not fully realise what we can offer. But we have this continuity across our bank, which means we can cover a property transaction for a lifetime.”

Anderson says this continuity, as well as the prospect of cost savings by staying with one provider, is particularly attractive to experienced, seasoned property developers.

“There is nothing more annoying for them than when they go back to their broker with ‘Right, I have finished the first stage, but now I have to go and find finance for the second development stage,” Anderson explains.

“It is much easier and cost-effective to go for the one lender approach. If we can give an early heads up to the Real Estate Finance team about what is coming down the line, then we can tailor what we do to help the project get to that next stage.”

This approach calls for strong collaboration and relationships, both personal and professional, within the bank.

“I was recently chatting with Matthew about a client who is buying some land and wants to bridge it for some of the time while they work out the planning for another couple of floors on the scheme,” says Eden.

“We discussed his case, and now we have agreed to do a Build-to-Rent scheme. But it is not only the property side we support on, as we have also put the directors in touch with our Private Banking team to take care of their personal finances.

They can become customers by opening deposit accounts with the bank and using our wealth management services. It means that we have a truly holistic solution to offer developers.”

Other funding options for developers

Another option for developers is the bank’s asset finance offering via its subsidiary, Renaissance Asset Finance, where they can secure finance (bought or leased) for machinery and construction equipment like cranes and diggers.

“Given the size and scope of the bank, we find that often the best source of referrals is within our organisation,” Anderson says. “As such, we have recently made bigger efforts to understand more about what each team does at a very granular level. In fact, given the non-property services we offer, practically everything a developer may need is covered.”

If you want to find out how Arbuthnot Latham and/or Arbuthnot Specialist Finance can help you or your client achieve their real estate goals using the financing they provide, get in touch.

Arbuthnot Specialist Finance ASFLenquiries@arbuthnot.co.uk or submit an enquiry.

Arbuthnot Latham – Real Estate finance ALREFenquiries@arbuthnot.co.uk