Specialist Lending Solutions Podcast: ‘This is the type of market where specialist lending can thrive’
In this first edition of the podcast, Specialist Lending Solutions editor Owain Thomas spoke with Octopus Real Estate head of residential D’mitri Zaprzala and Sirius Property Finance managing director Nicholas Christofi.
The pair agreed that with mainstream banks having to retrench their offerings in the current environment, the specialist sector could prove successful, but they added crucial caveats.
“This is exactly the type of market where the specialist lending sector can thrive,” Zaprzala said.
“The specialist lending sector, because it can be more nimble it can move towards areas that need fulfilling, I think the opportunity will be huge.
“There will be pressures on all of us but this is the time for us to thrive rather than to shelter away.”
He added: “This time, more than in a normal world, the need for good advice is absolutely paramount because I think trying to navigate your way through specialist, high street and now government backed sectors is a minefield.
“Good quality advisers are the ones who will thrive.”
Christofi agreed, adding: “The most important thing as an adviser is we’ve got a responsibility to our borrowers and lenders to make sure that they are given the right advice at the moment and it doesn’t become transactional.
“Brokers historically in certain sectors have been guilty of being transactional. For example with bridging – in this particular market, without an exit strategy you are setting yourself up for a big fall.
“We have got a big responsibility as advisers and as lenders to be able to scrutinise how a borrower is going to repay and how a lender is going to get their money back.”
There was also a hint that Octopus was considering a return to the buy-to-let market.
And the pair highlighted an appreciation for the community spirt that had evolved during the pandemic with lenders and advisers coming together to support each other during the tough times.
Octopus hires BDM and makes two promotions
Kayley Stelfox (pictured) will be responsible for liasing with prospective clients, brokers and underwriters in her role as internal BDM and will bring local knowledge of the market to her position.
She joins from Ultimate Finance, where she was a funding adviser for six years.
Steve Bowes, who joined Octopus Real Estate as an internal business development manager in 2019, has been promoted to external business development manager.
He will be responsible for developing relationships with brokers in the North region and writing new business for the company.
Suparn Sapatnekar has been promoted to senior credit manager.
Sapatnekar joined the company in 2014 and relocated from London when Octopus Real Estate opened its Manchester office last year.
He will be tasked with making complex lending decisions and the progression of the junior credit manager, Chris Danks, who was promoted from case manager earlier this year.
Chris Timms, head of sales for the North at Octopus Real Estate, said: “Almost a year on from opening our Manchester office, we’re thrilled to be able to promote three members of the team, as well as bring Kayley on board, as we look to continue to establish ourselves in the North.
“The team has great enthusiasm and strong knowledge of the local market, with Steve, Suparn and Chris typifying both of these qualities.
“Welcoming Kayley to the team with her experience in the region compliments the team’s strong knowledge of the market. As our loan book grows, we only expect the team’s headcount to increase.”
LendInvest and Octopus complete deals worth more than £40m
LendInvest financed a £12m development project for Acorn Property Group in Wedmore, Somerset, completing the deal in eight weeks to meet the borrower’s timeline.
The deal was brokered by Daniel O’Neil at SPF Private Clients and is supporting the majority portion of a 55-home residential development which is a mix of two-, three-, and four-bedroom homes, 40 per cent of which is affordable housing.
The total loan provision for this site is £12m based on a loan to cost (LTC) of 90 per cent, with the total gross development value (GDV) for the development forecast to exceed £19.6m.
Acorn group managing director Melanie Omirou noted this was the fifth deal they had completed with the lender.
“After working together on a number of key deals over the last couple of years, we thought of them immediately for this development,” she said.
“Speed was crucial for this project, and from beginning to end the team worked swiftly to facilitate the loan in a tight timeframe.”
LendInvest co-founder and chief investment officer Ian Thomas (pictured) added: “Given the desirable location and the borrower’s extensive experience delivering quality projects nationally, we were delighted to get the opportunity to finance this project.
“The borrower was operating within a tight timeframe, requiring the team to move quickly and work closely with the borrower to get the funding in place.”
Octopus £30m deal
Octopus Real Estate provided a £29.6m loan to Matching Green for the ground up development of a mixed residential and commercial site in Bermondsey, London.
The deal was structured by the JLL Living Funding team.
Full planning permission has been granted for the development of 111 apartments, plus six commercial units, located at the prime London location.
The apartments will be comprised of a mix of one-, two- and three-bedrooms, including 42 affordable apartments, while the six commercial units will cover 11,800 sq ft.
Octopus Real Estate head of residential development Gavin Eustace said: “The strong location of this scheme makes it an attractive choice for both residential and commercial development.
“The commuter links and the proximity to the City of London will make the development an appealing option to future residential and commercial tenants.
“London remains an attractive investment opportunity for developments and demand is still high.”
James Allen, owner of Matching Green, added: “Neighbourhoods in London such as Bermondsey continue to be sought after locations for residents and businesses, and so we believe this development will provide us with an opportunity to meet the needs of both.”
Octopus Real Estate funds Birmingham student scheme
The finance agreement is the second to be completed in several months between Octopus Real Estate and property developer Bricks Capital. It follows a £21m agreement to deliver a 315-bed student scheme in Glasgow in October.
The loan highlights Octopus Real Estate’s continued focus on the student accommodation market, having funded more than £175m deals in the sector within the last year.
Bricks Capital currently has five student accommodation developments under construction, and already has a presence in Newcastle, operating under its True Student brand.
Gavin Eustace, head of development at Octopus Real Estate, said: “We’re always on the lookout for opportunities in this sector, and this latest deal with Bricks is another quality student development that will help support students in their academic performance and enhance their university experience. Cities such as Birmingham, with several academic institutions and a large student population, provide a great opportunity for developers.”
The Birmingham site is scheduled to be complete and open to students at the start of the 2020 academic year.
Octopus Real Estate lends £57m in December
The development team led by Gavin Eustace set the record in a month which it said is usually “challenging”. It attributed the performance to its pipeline and relationships within the sector.
Recent deals have included residential development and PBSA projects across the country including London, Glasgow and Birmingham, as well as smaller regional deals.
Gavin Eustace, head of residential development at Octopus Real Estate, said: “The big cities remain an attractive investment opportunity for developments in the right location and demand is still high.
He added: “Our focus will continue to be on ensuring a strong pipeline and to lend where there is appetite from developers to build good residential properties.”
The last 12 months have seen Octopus Real Estate set new lending records following the completion of deals worth £127m in October 2019.
Octopus and First 4 Bridging complete £21m loan on upgraded Clerkenwell office
The borrower upgraded the building and is now in the process of letting the new office spaces.
Dominic Gibson, fund manager at Octopus Retail (pictured), said the Clerkenwell district “offers a vibrant range of office accommodation and attracts key players in the media, marketing and technology sectors, with LinkedIN’s recent arrival in the area underlining this.”
The 33,000 square foot office is expected to benefit from the opening of the new Elizabeth Line station at Farringdon, which is slated for 2021.
Gibson said: “London remains a very attractive location for office investment and occupation. We are delighted to have completed another notable loan in the city.”
Octopus has agreed “numerous” commercial loans across the country this year including in Derby, Harlow, London, Luton, Manchester, Watford and Welwyn Garden City, it said.
Myles Williams, chief executive at First 4 Bridging, which recently became regulated, said: “This project is another example of the booming London office market. We were delighted to be instructed to source and secure funding for the borrower. Octopus was flexible and worked tirelessly to deliver within tight timelines.”
Octopus Real Estate completes £127m lending in October
The uplift was led by an almost doubling of commercial lending, including on deals in London, the South East, the Midlands and the North.
The loans comprised a mixture of refinancing, acquisitions and equity release and applied to projects from land-with-planning to a hotel and an office to serviced apartments.
Roughly half of lending was in London and half outside the capital.
Octopus Real Estate has opened an office in Manchester this month. Senior staff including a credit manager have moved to the new office from London and new personnel with experience in the North and other regions have been recruited.
Benjamin Davis, chief executive at Octopus Real Estate, said: “This is a significant milestone for our team, post-merger, reflecting the service we offer and the strength of our reputation and relationships.
“We will continue to evolve and to support borrowers in realising their property projects.”
Dan Murray, head of sales added: “As a flexible and nimble non-bank lender we can react to the market environment and listen to the needs of borrowers. We’ve spent a decade building a business and want to thank our brokers and lenders for their continuing support.”
Octopus Real Estate promotes D’mitri Zaprzala to head of residential
Zaprzala (pictured left) will be responsible for all residential lending across the specialist real estate investor’s business.
His focus will be on improving customer service while creating innovative residential lending products. He will also be responsible for building the sales team and continuing to harness long term relationships with introducers.
Currently, the residential lending business provides residential bridging loans, bridge-to-let loans, refurbishment loans and buy-to-let mortgages.
Zaprzala has been working in property for nearly 20 years and joined Octopus in 2011. His most recent role at Octopus Real Estate was head of sales, a position he held for four years.
Alongside Zaprzala, Dan Murray (pictured right) has been promoted to head of sales.
Murray will be responsible for running a team of business development managers, supporting borrowers in the residential, commercial and development lending sectors across the UK.
He has been head of London sales for the past two years and has extensive experience in property and sales, both at Octopus Real Estate and in previous roles.
Benjamin Davis, CEO of Octopus Real Estate, said: “D’mitri has already made a huge contribution to our business particularly having led our successful Octopus Real Estate sales team over the last few years.
“Residential lending is an important part of our business and the newly created role acknowledges our commitment to this sector.”
Zaprzala added: “Having witnessed the evolution of Octopus Real Estate over the last decade I am looking forward to both the challenges, and opportunities of leading to the residential part of the business.”
Earlier this week, Octopus Real Estate opened an office in Manchester, its first outside of London.
The lending criteria in the North will be tailored to the region and the company will consider loans from £75,000.
Chris Timms, head of sales for the North, at Octopus Real Estate, said: “Having worked closely with our loyal broker network in the North for several years we have listened to what they want from a lender.
“We have responded by opening an office in Manchester to fully support them. This has been something we have wanted to do for several years and it’s exciting that our doors are now officially open.
Octopus Real Estate funds £21m student digs
The developer, Bricks Capital, plans to complete the scheme in time for the start of the 2020 academic year.
The building, located on New City Road, will house students from the five main education establishments; the University of Glasgow, the University of Strathclyde, Glasgow Caledonian University, Glasgow School of Art and the Royal Conservatoire of Scotland.
Over the last 12 months, Octopus Real Estate has funded £150m, of student accommodation developments including schemes in Coventry, Bristol, Leicester and Liverpool.
Research by Octopus Real Estate revealed students were prepared to pay more for their accommodation if it had a higher standard of amenities. More than 75 per cent said they pay more rent for a private bathroom while close to 70 per cent were prepared to pay extra for their own cooking facilities.
Gavin Eustace, head of development at Octopus Real Estate, said: “The student accommodation sector is growing and offers a huge opportunity for developers who are willing to listen to and respond to students’ needs and demands.”
Octopus refinances ‘largest ever’ development scheme for £28.4m
The £28.4m facility refinances an existing development loan on the scheme in Ilford, East London. The project to refurbish a former office building is scheduled to complete in July and will provide one, two and three-bedroomed flats.
The loan is secured as first charge with loan-to-value of 68 per cent over 24 months.
The property is located in the London Borough of Redbridge in northeast London, within walking distance of two future Crossrail stations that are expected to connect direct to London Liverpool Street.
“This is an exciting private rental scheme that will deliver much-needed new-build residential stock in a sought-after location that is experiencing high demand for good quality rental properties,” said D’mitri Zaprzala, head of sales at Octopus Real Estate (pictured).
Paul Carmody of Outside the Box Capital Solutions was the borrower’s advisor.