The peer-to-peer lender said that its average loan size, the value of deals which it could consider and number of deals it could complete were all likely to increase substantially as a result.
Speaking to Specialist Lending Solutions, Relendex chief operating officer Max Lehrain (pictured) said the business was already seeing growth in demand from investors and borrowers.
“We’re growing quite rapidly now and expect to lend £100m next year, which would be three times what we’ve lent to date,” he said.
“We’re also hiring business development managers but we have to work hard to find the people we like. We want our BDMs to be part of the underwriting process so we don’t waste time processing deals.”
Balanced funding mix
The lender’s organic growth has partly fuelled the attraction of institutional investors Lehrain noted.
“We’re attracting more institutional support and it’s no secret that institutional lenders are turning to the bridging and development finance markets because it’s hard to find yield generating investments with security.
“But we have good growth in retail investment as well and we want to keep a balance between retail and institutional funding.
“So we have a 50-50 mix between retail and institutional funding because if you become too reliant on one provider it can become tricky,” he added.
More deals, higher value
At present Relendex will consider projects upwards of £250,000 with an average loan size of approximately £1-1.5m, although it declines around 75% of the deals it sees.
However, the anticipated growth in funding will allow the firm to accept some of the deals it currently is forced to turn down.
“Some of what we turn away is because it’s too large, so it will be nice to do more deals and also do a few of those larger deals,” Lehrain continued.
“By Q1 next year we are looking for our target deal size to be around £3m. We don’t want to disappoint anyone and with development finance the borrower generally doesn’t need all the funds straight up front.
“There’s plenty of room to play in space between £500,000 and £5m where other conventional sources of funding are less active and because of the way the business is built our costs don’t go up exponentially as we grow,” he added.
Ecologial developments and modular housing
Lehrain said the firm takes a cautious approach to the projects it will invest in, not wanting to be caught up in expensive marquee developments featuring the biggest mansion on the street.
Instead it would rather be funding a smaller conversion into a house of multiple occupation (HMO) or multiple units.
It also likes working with experienced developers and SME builders where there is a level of confidence in how the project will play out.
“We do like ecological developments and modular housing,” Lehrain continued.
“We quite like light industrial space, such as smaller industrial sheds, and also commercial to residential conversion as they are often central and in more attractive parts of towns,” he added.
The lender has also not focused London; being happy to spread its investments across England, Wales and Scotland rather than be over-exposed in the capital.