Andrew Hosford is director – head of bridging at Voltaire Finance
“Happy New Year … I hope you had a good break?” the start of every email for the next couple of weeks. I for one am over the moon that we are back and silly season is behind us. I’m no Grinch, I love Christmas, scotch, wine, Guinness, excessive food, cakes, pies, truffles and so on and so forth.
However, I dislike procrastination immensely and procrastinate is what the property finance market, from what I saw, did in December. Brexit is still looming large in peoples consciousness, when will article 50 be triggered?
Will it be triggered? Will we actually leave the EU? If we do to what extent? The questions go on and on and where there are questions there is uncertainty and a fair bit of concern.
Being British, my view is that we must push on and act confidently. This then inspires further confidence and we recover, perhaps even boom out of this uncertainty. This is a view/mentality that is shared with the majority of the people I engage with day to day.
It seems that new deal flow was healthy for all during the final quarter of 2016. It certainly was for us. The lead time, however, between taking a deal on and actually completing doubled. Forget December when the working day is severely reduced, the final month of the year is always a little down numbers wise, the rest of the quarter was down as well. We assumed that as soon as January arrived we would be flooded with new deals and the existing deals in the pipeline would finally progress and start to complete. I am pleased to say that we were spot on.
Two of my deals that had stalled pre-Christmas have finally moved on and both entered into legals. These deals combine to just under £10m. A valuation has been instructed on a portfolio purchase being bought for £26m with a view to instruct solictors later this week.
A purchase and development of a mixed use scheme in the midlands with a loan requirement of £50m now has planning and the valuation has come back favourably, the lender is now going to credit and although it’s not a given we are not expecting any surprises on that one. A pair of smaller bridges with a combined value of £500k have also progressed into legals.
On top of that I have had a central London development scheme come in for £100m (there are c. £30m of pre-sales in place) and a commercial owner occupier unit in Essex where the client requires equity release of c. £2m has come in. combine these with a couple million pounds of more traditional bridging deals and the first quarter looks like it could be a record for me. I am not alone at Voltaire though, we have two other key brokers who are seeing the same sort of deal flow and cash requirements as me.
Obviously there is still uncertainty in the air and we will never assume a deal is going to complete just because the valuation stacks up, but the sheer volume of deals has got my confidence up. I have spoken recently about the volume of liquidity in the market and it looks like lenders will now be getting the deal flow to allocate all of their funds. Hopefully anyway. There are a lot of people in our industry that have been around a lot longer than I and I am sure could better put into words what drives our business.
I believe that one of the big drivers is confidence though. Confidence in the market of course, but confidence in lenders performing, doing what they say they will do. Confidence in trends, locations and desirable asset classes. Confidence in value and exit. I am sure there will be just as much change and volatility this year as there was last, but while confidence up I can only see a better year ahead.