Our Associate Debt Finance Director, Lucas Anglin, weighed in on the perception of the lending landscape as slow and unreliable, and how new alternative lenders, like OakNorth, are countering this to offer fast and flexible solutions that put entrepreneurs first.
It was recently reported in The Financial Times that property funds are set to sell off their premium property assets at discounted amounts, with opportunistic real estate investors circling closely as a result.
The article claims that the pension funds selling their assets are looking for buyers that don’t require debt, making them ‘fast’ and more ‘trusted to deliver’ on the purchase.
The idea that debt finance is slow and unreliable is unfortunately not an uncommon perception when it comes to the traditional lending landscape – one that was created and maintained by the large incumbent banks. The FT implies that debt is not a desirable way to acquire capital – and unfortunately for fast-growth ambitious businesses, this is at times true.
This year, due to the geopolitical and economic climate, we’ve seen high street banks rescinding certain loan products, or worse retrenching from new lending altogether, focusing only on a select number of existing customers – or high-value relationships. The result? Experienced entrepreneurs are having their growth side-lined and looking elsewhere to build momentum.
It’s unsurprising then that pension funds that want a fast sell don’t see businesses seeking debt as potential buyers. As our Head of Debt Finance, Ben Barbanel, has recently said: ‘Too many entrepreneurs have experienced the “20 weeks to a ‘no’” when it comes to borrowing and unfortunately in times like these, that only gets worse.”
Alternative lenders provide the solution to slow debt
But there is an alternative to slow debt, there are lenders that think more like business owners and want to move fast, offer specialist lending and prefer transparency over opaque credit decisions. That’s how we work at OakNorth – and we’re unwavering when it comes to speed and reliability. We’ve lent throughout Brexit, the COVID-19 pandemic and we’re continuing to back bold UK businesses throughout the current economic downturn.
As we could see property prices fall by c.20%, this creates exciting opportunities for bullish investors who might be looking to secure discounted deals for high-quality assets to support their expansion plans. Furthermore, high-growth, profitable businesses can look to capitalise on the opportunity of buying assets with their own cash and then regain liquidity quickly through accessing debt finance so they don’t have to stall their growth plans.
Doubling down to support ambitious businesses – even in economic cycles
I’m delighted to say that at OakNorth, we’re able to offer bespoke debt finance facilities that cover both these scenarios, plus many others. An example of this was our £21M transaction from earlier this year with to Tri7 and Alchemy to support their investments in real estate value-add opportunities that have arisen on the back of the COVID-19 pandemic.
Another example was our more recent £44.5M co-lend alongside our partners, ASK, to privately owned property development company Sheen Lane Developments, to fund their acquisition of Richmond’s former House of Fraser and extensive refurbishment of the site to create a mixed-use retail and office development.
Following these successful transactions, we’ve recently doubled down on our offering to the UK’s property development and investment industry, by creating a new digital journey that offers fast loans in one easy application.
What the above highlights is that we have extensive experience supporting some of the biggest names in the property investment, family office and private equity spaces with their growth ambitions, since our launch in September 2015. We continue being able to do this through cycle too, reassuring our customers that we’re here to be the trusted funding partner we’ve always been.
Our doors remain very much open – whether we’ve lent to you before or not, so if you’re feeling optimistic that now’s the right to invest or grow your business and want to make sure you have the capital to opportunistically do this, please get in touch and we’ll see if we can help.
Lucas Anglin – Associate Director at OakNorth Bank
