Reditum Capital on mission to shake up bridging services
UK-based bridging provider Reditum Capital is on a mission to shake up bridge financing in a post-Trump and post-Brexit world, Tim Mycock, business development director at Reditum Capital told REFIRE.
As a result, the company will now offer LTVs of up to 80% in the UK (70% elsewhere in Europe) and a reliance on 180 days as opposed to 90 day forced sale valuations.
‘We’re property people at heart who have been developers before, and as a result, we price for risk rather than for 5 bps,’ Mycock said. ‘We feel more comfortable now offering LTVs in the UK of up to 80% but we’d expect cracking, good quality assets and sponsors for these rates to apply. Our goal is to alleviate some of the problems in the bridging finance market post-Brexit and post-Trump.’
Reditum Capital’s move is designed to take advantage of the current dislocation between borrowers and senior debt providers. ‘As a result, we have arranged for a massively quick turnaround in timeframes,’ he said. ‘Once our legal team receives all the information from the borrower and this is approved, we can close the transaction within 5 days. We want to disrupt how the industry is working and we feel there is a real demand, on the part of borrowers, to move quickly. It’s about responding to consumer demand.’
Competition in the marketplace is fierce, according to James Spencer-Jones, head of EMEA structured finance at C&W in London. ‘There’s a lot of competition to underwrite loans for prime assets with good sponsors. Banks have become very proactive and will call us up once they know we are selling a particular building,’ he said.
Reditum Capital has removed personal recourse for deals below 60% LTV ‘because it means that clients already have skin in the game’, according to Mycock. He acknowledges that other bridge finance lenders are ‘moving more quickly’, largely because many banks have put the brakes on lending ahead of the UK’s looming General Election in June. ‘The world is very different from two years ago. Today, there is some clear stagnation and both banks and consumers are more cautious. Looking forward, our goal is to expand rapidly regardless of these trials and continue to shake up the bridging system.’
Bridging loans are especially popular with investors who may be short of equity for a short period, Spencer-Jones said. ‘Bridging loans make up less than 5% of the debt market. That said, there has been an increase in alternative debt funds, such as mezzanine funds. However, some of them are struggling to underwrite loans because they expect returns of around 10%, which is wide of the mark.’
Since its inception in 2013, Reditum Capital has arranged over £350m of funding for real estate and asset-backed transactions across the UK, Europe and the rest of the world.