Collapsed deals drove Reditum launch to rescue Covid-hit transactions

Collapsed deals drove Reditum launch to rescue Covid-hit transactions

 

Reditum Capital had 43 live property projects during the first lockdown, and because of lenders pulling out or reducing leverage some of those products had their initial funding withdrawn. The firm then recognised the need for a lender that was willing to provide finance for projects which were struggling to find funding. 

“The launch was not necessarily planned, it was brought on by Covid,” said Mark Stephen (pictured), founder at Reditum Capital and managing director of Reditum Lending. 

“We started seeing particularly complex bridging loans of large sizes which needed to be acted quickly, where all of a sudden people were being let down by their lender and were willing to pay a higher rate to get a deal closed very quickly.” 

It was then that Reditum Lending was set up to facilitate similar cases. 

Reditum Lending is funded through an institutional facility as well as its existing internal capital and is hoping to complete on its first loan by today. This will be a £10.8m bridge for land in Scotland where the development of 750 homes are planned. 

The lender hopes to deploy a minimum of £80m in its first 12 months and rates start from 0.67 per cent with a maximum loan to value of 80 per cent. Loan amounts start from £500,000 and terms are between six to 24 months. 

Parent company Reditum Capital was established in 2013 and predominately serviced projects which required bridging loans of over £1m, including prime residential properties in London and office buildings.  

It has closed more than 100 transactions, worth over £520m during this time and completed its first short-term bridge since the lockdown in May, a £10.1m loan on a parcel of land in Newcastle which needed completion in 10 days. 

 

Reaching out to brokers

The firm has an existing broker network of 80, mostly made up of introducers, accountancy firms, law firms and insolvency practitioners but is looking to expand to the specialist bridging workforce. 

Stephen said: Because of how specialised what Reditum Captial does it often doesn’t end up with a broker. As part of the launch with Reditum Lending we’re looking to actively increase the number of brokers we work with.  

We want to put ourselves in front of brokers and give them another product in their arsenal that they perhaps can’t get somewhere else.” 

Reditum Lending will take cases on a deal-by-deal basis and will accept projects which are completely or predominately residential.

To be entitled to its lower rate of 0.67 per cent, borrowers must not be declared bankrupt and the loan they are seeking to refinance must not be defaulted.  

Stephen said the lender would still be willing to use its internal capital to fund projects outside of that criteria, just at a higher rate. 

He added“The housing shortage in the UK is a big issue and if there are no lenders willing to support site acquisition, development exits and senior development finance type of products.

“All that will happen is construction will stop and when the market recovers there will be an even higher shortage which will fuel more high price growth and lack of housing availability. 

“This is a strategic move for the wider group as we look to increase our facilities to property professionals and landlords across the whole of the UK.