"We are working with brokers across the UK on various bridging and commercial products, including residential and commercial bridging, auction finance, semi-commercial bridging, land with planning bridging and development exit finance."
We spoke to Kunal Vaitha, principal and co-founder of Reim Capital, about how the Covid-19 outbreak continues to affect the market and what opportunities and issues SMEs will face in the next twelve months
CR: What are Reim Capital’s main product areas and specialisms?
Reim Capital is a specialist financier and short-term lender helping investors and property developers realise their potential. Founded in 2019, we are an experienced team of property developers and finance/banking professionals. After months of collaboration in search of a fair formula, we entered a Joint Venture with a large private debt fund to provide us with liquidity. With an exclusivity agreement in place, Reim Capital is able to have funds available for a variety of commercial and residential projects.
CR: How is the Covid-19 outbreak affecting the market and how can lenders and advisers overcome these difficulties?
The Covid-19 outbreak caused an initial slowdown in the market with valuers taking a very conservative approach and lenders lowering LTVs. Subsequently, lenders have taken a pragmatic approach by continuing to lend at risk adjusted levels whilst giving developers and investors the opportunity to complete on deals The market seems to have improved over the last month or so and we are expecting a surge in new transactions from October 2020 as investors will see more opportunities.
CR: What are Reim Capital’s main aims or focuses in 2020?
We are planning to write £2-3m per month during 2020 and expect to surpass these figures later this year, by growing our broker distribution. We are well on the way to achieving this, with broker partnerships up by 30% over the last three months. We are working with brokers across the UK on various bridging and commercial products, including residential and commercial bridging, auction finance, semi-commercial bridging, land with planning bridging and development exit finance.
CR: What trends do you expect to see within the development finance market in 2020?
Over recent weeks, various lenders have pulled product ranges and unfortunately development finance has been one of the hardest hit sectors. Developers looking for finance will face increased challenges and they will need to put more equity in each project and provide additional security. This is going to impact the smaller developers proportionately more. But the good news is that construction and property development is starting to recover and we have seen an uplift in demand for development finance over recent weeks.
The prospects for the construction industry are encouraging. The CLC estimates that there are more than 700 planned investment projects and more than £500bn of investment in the National Infrastructure Pipeline, including £118bn in the Construction Pipeline.
CR: What opportunities and issues do you think SMEs will face in the next twelve months?
Covid-19 is creating significant cashflow requirements amongst many small businesses and investors alike. The Association of Short-Term Lenders (ASTL) expects brokers and lenders to see increased appetite from developers, portfolio landlords and business owners as the market recovers, resulting in a surge in demand which will help the market to bounce back.
CR: If you could see one headline about the commercial lending market in 2020, what would it be?
That there is a decrease in LTVs and an increase in commercial rates.