Titlestone’s guide to Stretched Senior Funding

Titlestone's guide to Stretched Senior Funding



Stretched Senior Funding – offering a higher level of gearing at a fixed rate to reduce the amount of equity to clients - is gaining a lot of popularity….

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Stretched Senior Funding – offering a higher level of gearing at a fixed rate to reduce the amount of equity to clients - is gaining a lot of popularity.

Oliver Thompson of first charge lender and stretched senior funding specialist Titlestone caught up with DFT to explain a little bit about why his firm is seeing more competitors move into its market.

As one of few stretched senior lenders in the market, Titlestone offers a product which enables developers to simplify their funding arrangements, whilst spreading their equity across a greater number of projects.

“Our product is suitable for experienced developers in the south of England with more opportunities than equity,” Oliver explained.

“‘Stretched senior’ is a relatively new type of funding which specialises in offering more generous gearing against projects, usually up to 70 per cent of GDV or 90 per cent of total cost.”

 This additional stretch often removes the need for clients to seek expensive mezzanine finance and can provide a “vast improvement” to return on capital when compared with traditional funding models, according to Oliver.

“The ability to obtain finance at this level of gearing with one legal charge, one set of due diligence and one relationship tends to save a lot of time and costs,” Oliver said.

“The feedback we receive from our clients on the speed and efficiency of our product is really positive and shows us how important it is for developers to have a reliable funding source.”

Since launching Titlestone two years ago, with the backing of Oaktree Capital, the firm has arranged facilities in excess of £600 million for over 120 clients. Loan sizes are typically between £1.5 million and £25 million and used to support refurbishments, conversions and new build apartments and houses.

“As you might expect, stretched senior facilities are priced at a premium to traditional debt with fixed rates of 9 per cent to 12 per cent the norm – those rates can look expensive, but when considering that we are able to fund up to 90 per cent of cost (sometimes more where value has already been added through the planning process) it is usually considered by our clients as cheap equity.

 “In addition, we do not charge early repayment or non-utilisation fees.”



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