Investment Finance
Whilst the majority of our activity is focused on the arrangement and structuring of finance for development projects, we do also assist clients with arranging investment finance that may be needed.
This may relate to commercial, residential or mixed-use schemes and terms vary considerably between each transaction.
On all investment transactions, the key issues that determine the facility that can be arranged include the following:
- Quality, experience and financial strength of borrower
- Covenant strength of tenant(s)
- Form of lease
- Overall nature of quality and location of property
The level of funding available is determined by assessing the above factors in conjunction with the relationship between rental income and interest cover.
For example, many investment lenders require a minimum level of income equating to 120% of interest cover in conjunction with a predetermined capital repayment profile.
With the longer term nature of investment finance, it can be advisable for clients to minimise the risk of interest rate fluctuations by utilising financial instruments such as caps, floors and collars which effectively insure against interest rate changes.
The length of term of such facilities can vary substantially with many lenders seeking to limit loan terms to ten or fifteen years, as well as carefully assessing the level of capital left outstanding at expiry of the term.
A new tool now available to clients with a portfolio refinance requirement of circa £2M plus is the option to have their debt consolidated with other facilities in the form of securitisation schemes. This allows our client to benefit from attractive refinance rates.
In order for us to advise on potential terms available, clients should forward preliminary information on their investment funding requirements with a summary of the information referred to above.