In our continuing series highlighting global locals with a distinct passion to live, and work in Singapore, expat choice caught up with Sophie Brown, a UK expat who began her career as a Chartered Accountant with PwC in London before moving to Singapore with Arc & Co.
Her strong relationships with lenders and clients, as well as being based in Singapore with an extensive network of, High Net Worth Individuals, Family Offices, Private Pools of Capital and established Financial Institutions puts her in a unique position to advise clients and assist with debt and equity raising requirements.
"Bridging finance is a very useful tool and can provide solutions to problems that on first glance, will be difficult to solve. It is my pleasure to give expat choice readers an update on the current bridging market and various scenarios where bridging is a helpful solution."
First- and Second-Charge Bridging
Scenario: Adding value through enhanced planning
A lot of the clients that we work with are looking to add value to their development schemes through gaining enhanced planning. Many bridging lenders do not take the increased value into account.
Solution: Through our many years of experience working with developers in such scenarios, we do place an increased value on gaining enhanced planning and understand the ‘doors’ that this can open for the developer.
We work with a number of second-charge bridge lenders who are willing to consider the increase in value and then leverage off this.
Alternatively, developers can instruct a first-charge bridge lender who will recognise the increased value in the land and leverage up to 90 percent of the purchase price - subject to this not exceeding 70 percent of the enhanced value.
Scenario: Market uncertainty?
Due to the current market uncertainty, first-charge bridging lenders are reducing their exposure levels. This is making it difficult for us to find solutions for developers who are looking to amend their current, stretched senior development facilities.
Solution: A second-charge bridging specialist can gear up to 75-80 percent Loan-to-Value (LTV) to enable the developer to exit the development facility. Typically in this scenario a first charge lender would fail to achieve the above figures in order to remove the development facility.
Bridging to acquire land
Scenario: You want to gain a competitive advantage
Solution: The speed at which bridging finance can be put into place can give you a competitive advantage during the land acquisition phase. Land in prime development areas can be snapped up very quickly, so it is important that you have the funds to close the transaction quickly. It may take a long time for the traditional financing process to go through, which means there is a risk of losing your land acquisition to another buyer. Financing with a bridge loan can solve this issue.
Scenario: You don’t have planning permission yet
Solution: When buying land using bridging finance, you are not subject to the same demands that traditional long-term finance places on you. This means that you can make the purchase regardless of whether planning permission has been granted. Bridging allows you to purchase the land and make any changes or apply for permissions that you need for your development finance thereafter.
At Arc & Co, once we have a good understanding of the clients past experience and the premise of the intended project and providing that the lenders is comfortable and can see a good exit strategy. It is possible to facilitate a bridge loan to acquire land with or without planning.
Scenario: Option agreements
Solution: Thinking purely about securing land. A very useful tool for developers is the use of putting in place an option agreement. Simply put, an agreement between the borrower and the vendor to say subject to planning, the borrower will purchase the land for ‘X’ price.
It’s a very useful method to secure land for your development. Once the planning is in place we can put in place a development facility based on the now enhanced value.
Development Exit Bridge
Scenario: Developers have a number of units left to sell and the end of the loan term is fast approaching
A developer may need to redeem their development finance facility prior to having sold all the units. Depending on how many of the units have sold to-date, you may be in a position where the current loan-term versus the sale of the units is not running parallel.
Solution: At Arc & Co. we can implement a development exit bridge loan to facilitate a longer sales period for the client; ultimately eliminating any risk of a default rate.
Scenario: You’ve spotted a new development scheme whilst completing a current project
Whilst securing the remaining sales on a current development project, it is very common for a developer to spot a new opportunity which they are keen to secure. However, liquid cash can be limited due to your equity being locked into the current development project.
Solution: At Arc & Co. we can design and structure a bridge loan to enable the release of capital from your current project, allowing you to fund your next project. By opting to refinance the current project, this allows you to utilise the embedded equity at a much faster rate and to go on to secure the next project.
You can contact Sophie Brown on LinkedIn or email [email protected]
