Big Interview: Jon Salisbury, Managing Director, Ortus Secured Finance

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Jon Salisbury Ortus Secured Finance

2021 was the year that Ortus Secured Finance stepped on the gas in the residential property market. More innovation and expertise will be needed in 2022 to help the UK economy power back from the Covid pandemic.

Bridging lenders will have to get creative in 2022 if they are going to fully prosper in the uncertain post-pandemic months ahead.

Jon Salisbury, managing director of Ortus Secured Finance, told Bridging Loan Directory that as the economy and society hopefully recovers from the worst of the pandemic “blind applications of lending policies” would not be acceptable to borrowers.

“Nobody knows what is going to happen. Will home working remain the norm or will offices be reimagined to cope with more flexible working? What will the rise of e-commerce mean for property on the high street?” he says.

“People are going to come up with some creative ideas this year and lenders will need to be open to these proposals and projects. There could be some interesting deals out there, but you must listen to and sometimes challenge your borrower over their ideas.

Have a grown-up chat with them and see if you can buy into what they are doing. If you can do that then you should see some great opportunities this year.”

Ortus showed its creativity last year with the launch of a new product that has revolutionised its residential lending offering.

The group which launched 9 years ago as a specialised commercial lender focussing on pubs and hotels, has always provided residential loans but only very quietly.

“Our first-ever loan was residential but it hasn’t been our specialism. We have been known for lending to the leisure sector and other commercial sectors,” says Salisbury.

“However, as demand grew last year, we decided that we wanted to carve out a piece of that very competitive market. You always want introducers to know that they can come to you for everything.”

The result was a new Standard Residential product with a rate of 0.499% per calendar month, a 2% procuration fee and an LTV of 70%.

“We had to create an exciting and viable product. You must give introducers something they can sell to their clients. It’s no good them telling borrowers that we are good guys, we listen and give good service.

Of course, that’s important but you must also be competitive,” he explains. “It has gone very well. We are now doing more residential loans than ever before, and it has become a significant part of our book.

The product is very easy to understand and straightforward to deliver and we have built so many fantastic new introducer relationships off the back of it.”

Indeed, Salisbury says Ortus spent as much time working on the streamlined lending and legal process as on the product itself.

“It is a different type of challenge. Introducers always need speed but with commercial loans, there is much more around understanding the asset and predicting where the bumps in the road are going to be,” he states.

“Residential is speed and simplicity. It is about understanding that you are dealing with simpler assets so you can’t justify the same level of due diligence that you would have in a commercial loan.

With commercial lending, you look at the financials, the quality of the borrower and determine whether they will be able to exit.

With a residential the focus needs to be sharper:  Does it make sense to us? Does it feel like the right deal for them? Can they repay?”

If the answer to those three questions is yes, adds Salisbury, then it is “all about getting your valuation in and processing the deal. You can’t overcomplicate residential”.

But commercial continued to play an important role at Ortus in 2021 with increased volumes. Part of this was completing Coronavirus Business Interruption Loan Scheme (CIBLS) loans to smaller businesses mainly in the leisure, hospitality, and retail sectors.

“We’ve been involved in leisure since we were founded,” says Salisbury. “So much so that we became known as the ‘Pub Guys’!

When Covid hit many market commentators thought pubs would really suffer, but our borrowers have done really well.

They tell us that when they re-opened after the lockdowns, they were busier than ever, especially those with outdoor space.

Perhaps it is a behavioural shift from people or just that when something is taken away from you it is more appreciated and people are now genuinely trying to support their local pubs.”

In addition, hotels, campsites and B&Bs all around the country have also done well from the staycation trend during the pandemic which has aided Ortus’ buy-to-let and holiday let solutions as well.

It is easy for Ortus to gauge this kind of national sentiment and performance given that it has offices in London, Manchester, Belfast and for the last two years Glasgow.

“We’ve had offices in Manchester and Belfast for several years and they are both really established and successful. Glasgow is the newest office and it’s going really well.

As it happens, one of our first ever loans was in Scotland so a presence there was probably overdue,” Salisbury states.

“Thanks to the local office we have built up the business and we are excited by the opportunity both in Glasgow and in Edinburgh. We haven’t really touched the sides yet and the more we can do the better.”

Salisbury says Ortus are also looking to recruit more people for its Glasgow office – as well as more lending support to keep processes efficient and fast nationwide – but are hesitant in declaring a similar hunt for new offices.

“We’d love to do more business in Birmingham and the West Country but with us, it is usually a case of the office following the person,” he states.

“When you come across the right person in a new area then that is your opportunity to build into that region.”

Wherever they are based Ortus expects to be busy this year in both residential and commercial.

“Residential has started so well that I believe it is going to continue to fly. It is such an efficient product that the more people use it the more they are coming back to it,” he says.

“In commercial, we have some clients who are taking strategic positions on the high street. I certainly don’t see the death of it.

We financed shopping centres last year and some questioned whether we had lost our minds! But no, we did not.

We are still small enough and smart enough to listen to people and the borrowers we supported have done incredibly well.”

It’s back to the point he made at the start – listening and creativity. Salisbury certainly hasn’t run out of ideas.

“On the creative side this year we are thinking about longer-term products. We would like to create the kind of products clients might need after a bridge has finished,” he explains.

“They will be more development type products for businesses which have traded for one or two years.”

Being ready and adaptable for all eventualities this year is key. Indeed, Salisbury calls on all lenders to get ready to be ‘needed’ in 2022.

“If Omicron is the end game, then it is great that things may return to normal. But you have got to keep an open mind,” he says.

“I think everyone in this sector is going to be needed to help deliver the UK economic recovery. There are few signs of high street banks really getting behind SMEs, early-stage firms or those that don’t have the best financial record over the last couple of years.

Therefore, people are going to find their way into our sector, and we must step up and show our professionalism and expertise. All of us.”