CS Richard, you have indicated that R&E Finance has a focus on projects of £50m and over in terms of costs for 2022. Can you tell us more
RN We now have a wide range of funds available, many of them pension funds, Assets Under Management and similar funds, and the fund managers are seeking the larger, quality projects.
CS Why have these funders approached you for clients?
RN We have been in the industry for some 30 years, and have built a reputation for submitting clearly defined and accurate applications; frankly, the funders do not want to waste time with incomplete or inaccurate information.
CS So what is the advantage for developers to submit their applications through R&E Finance?
RN We are approved brokers for the senior debt providers with the best terms, both for experienced developers and those embarking on their first real development project.
CS So there are different rates for developers with different levels of experience?
RN Yes, and that is in terms of the rate, and also the small print – penalty clauses for overrun, early redemption, levels of PG’s, etc.
CS We will look at the matter of PG’s in the next interview. However, I believe you ensure that the full funding stack is included before the application proceeds to lenders?
RN The levels of senior debt lending are between 65% and 75% of GDV. So, if the developer does not have cash to fill the gap, we need to find, mezzanine and possibly a JV partner
CS So that means putting possibly three or four parties together in a very detailed arrangement?
RN Yes, and we need to speak to the decision maker in each case, and those individuals trust us to bring up to date and accurate information for them to asses and make a decision.
CS So the negotiating you do ensures that all the funding is set out and made available from Day One?
RN The important point is that the terms and conditions of each deal matches and is laid out as legal documents.
CS How does drawdown take place?
RN Normally drawdown will take place in stages; this will be based on a Surveyors report that each phase of the work has been completed to the required standard, triggering the next payment.
CS So as long as the work is carried out properly, there is no worry about funding the build out, as the project proceeds
RN Yes, our application process does take time and concentration to complete, but there is nothing worse than having cashflow problems once the project has started.
CS So what you are saying, yes, it is time consuming at the outset, but do this part once, and do it right, and it will pay off in the long run.
RN Yes; and, of course, as well as the larger and experienced developers, we, as always, welcome new developers and wish to be part of their success story.
CS Thank you, Richard