Are bridgers born with the development finance gene?

Are bridgers born with the development finance gene?



Can bridgers do development finance? In general, industry experts seem to think the answer is yes, but only if the relevant infrastructure is in place .

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Can bridgers do development finance? In general, industry experts seem to think the answer is yes, but only if the relevant infrastructure is in place.

As more and more bridging lenders are moving into development finance and offering more products, questions have been asked about how easy it is to transfer into a different type of financial service.

Bob Sturges of Omni Capital said that it can be done but the bridger still needs to have the necessary capabilities, skillset and funding capability.

“Omni Capital has been able to move successfully into this type of development funding because of our association with CPC Group, our parent business,” he said.

“Highly experienced in up-scale and often nuanced development projects, we have been able to leverage their specialist expertise and funding resources to mitigate our risk while maximising opportunity.”

Meanwhile, Director at Bishopsgate Funding, Patrick Ruane, warned bridging lenders diversifying into development finance receive mixed results.

“Development finance is a much more risky type of lending for the lender than plain bridging,” he said.

“There are more things that can go wrong, and that is why development funding is a very specialist discipline. In order to succeed, a bridging lender needs a new skill set and be able to deal with a constantly changing picture with a project.”

John Waddicker of Positive Commercial Finance agrees that development finance is very specialist and should not be entered into lightly.

“Development finance is much more involved and further diligence needs to be carried out around the scheme and the developer in comparison to bridging against an existing property.”

Russell Martin of F4B thinks bridging professionals have the potential to do development finance very well and they have been working with many bridging lenders to secure finance for projects.

“We have a number of deals currently running whereby the client is delighted with the service and experience being provided by a bridging lender for a development finance facility,” he said.

“We have a development finance facility of £3.5 million completing in the next week or so with a Bridging Lender.”

Steven McColl of Soho Corporate agrees with Russell:  “Of course they do and can; it is an important part of the private finance market, in a world where high street banks don’t just take commercial views on such matters.”

However, Chris Philp of Pluto Developments disagrees with those who think bridging financers can move into development finance.

“Development lending requires specific skills - an ability to assess construction risk, sales market risk and the ability of the counterparty to undertake a development,” he said.

“Bridge Lenders do not have experience of doing these things.”

 



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