Memery Crystal joins the ASTL

London-based full-service law firm, Memery Crystal has become the latest professional organisation to join the Association of Short Term Lenders (ASTL) as an associate member.

The law firm has a track record of acting for alternative finance providers, helping to develop their reputation and portfolio by delivering advice on creative security structures, lending terms and the suitability of agreements. Memery Crystal also advises UK companies seeking to raise finance through progressive schemes such as corporate mini-bonds, listed bonds and crowdfunding.

Vic Jannels, CEO of the ASTL, says: “I’m happy to welcome Memery Crystal as the latest associate member of the ASTL. When it comes to associate members, we always try to introduce new businesses that can offer something different and interesting to our lender members, and this is certainly the case with Memery Crystal, which offers a fresh take on the legal services it provides to the short-term lending community.”

Daniel Tunkel, Head of Financial Regulation at Memery Crystal, says: “We’re very pleased to be able to join the ASTL as an associate member. The firm’s practice has advised a substantial number of bridge and short-term lenders and finance arrangers, chiefly on how to operate outside the requirement for regulation. This is a sector whose efforts will be very much needed to inexpensively mobilise capital for rebuilding the UK economy after the Corona crisis, and we look forward to playing our part.”

PRESS RELEASE: FRIDAY, 26^th MARCH 2021

Acre Lane Capital joins The Association of Short Term Lenders

Acre Lane Capital has become the latest lender to join the Association of Short Term Lenders (ASTL).

Acre Lane Capital offers development finance and bridging finance for a range of purposes, including light and heavy refurbishment, property investment, auction purchases, development exit loans and bridging out of receivership.

Ian Wilson, CEO at Acre Lane Capital, says: “At Acre Lane Capital our guiding principles are to act ethically and to deliver on what we promise, and so it was a natural fit for us to become members of the ASTL, which promotes high standards throughout the industry. We believe in partnerships and transparency, and so when we issue the Decision In Principle, we will make best efforts to honour those terms and do as we say, unless the risk changes. We don’t deliberately promise unachievable deadlines that can’t be met. And, where a borrower has been communicating, and the risk is rational, we are able to offer extensions. We are looking forward to working with the ASTL and other members to grow the availability and reputation of bridging and development finance to a wider range of customers.”

Vic Jannels, CEO of the ASTL, says: “I’d like to welcome Acre Lane Capital as the latest lender to join the ASTL. As with all of our members, Acre Lane Capital has demonstrated a commitment to customer focus, high standards and transparency. And I would encourage all brokers seeking a short-term lending solution for their clients, to look for ASTL membership as a badge of quality.”

PRESS RELEASE: MONDAY, 8th MARCH 2021

Do we really know what receivers do?

There are so many more parties involved in the bridging process than simply a lender, customer and intermediary. Whether it’s facilitating originations, enabling completions, or supporting collections and recovery, there are many businesses that ensure our industry is able to function effectively and, at the ASTL, we make it our business to understand and educate about the role of those businesses and why they are important.

One question that arose recently was, do we really understand what receivers do? The role of a receiver has actually been around in one way or another for hundreds of years, but it’s one area of the process that I believe is still open to misunderstanding.

The definition of a receiver states that it’s a person appointed by the holder of a fixed charge to enforce its security, but what does that mean in practice, and how does the appointment of a receiver fit within the standard legal enforcement process?

In order to help answer some of these questions, we spoke to the team at Sanderson Weatherall, who are associate members of the ASTL. One of the themes that became immediately apparent is that, in bridging, we work in a complex industry. Cases are rarely straight-forward and so, when things go wrong, the solution is seldom immediately apparent. With this in mind, one of the first things a receiver will do to facilitate recovery is to get on the ground (metaphorically) to uncover some of the detail that may not have been immediately apparent to a lender during the underwriting process and, in uncovering this detail, the route out of the situation usually becomes much clearer.

Daniel Hardy, a Partner at Sanderson Weatherall, describes two case studies which explain this dynamic in practise.

Long leasehold flat

A first charge holder relied on valuation arranged by the borrower, and advanced staged payments of a short-term loan on the assumption that the borrower would fully refurbish the flat and extend the leasehold interest so as to enhance its mortgagabilty prior to sale. The deposit was borrowed from a third party who took a second charge. The flat was refurbished to a high standard, but the borrower was unable to secure a sale sufficient to cover the first charge debt. The borrower’s expectations of value were exacerbated by unrealistic agents’ advice on value. 

Default interest was accruing with no prospect of a full recovery; consequently, any recovery would lead to a complete loss for the second charge holder. The first charge holders appointed receivers who collected rent from the short-term tenancy and reached agreement with the freeholder to extend the lease; the receivers resolved a party wall dispute and achieved a sale through private treaty having liaised via the lawyers to get a consensual release of the second charge to avoid a TR2 overreach process which would involve directly the first charge holder.

Freehold industrial site with potential for residential development

The site was owned jointly by the borrower and an elderly relative. The adjoining site was owned by the same relative and provided the visibility splay necessary to enable residential development of the site at some future date. One of the borrowers was in occupation of the security under an informal arrangement. The borrower asked the receivers to postpone the realisation to enable them to procure consent for residential development. The receivers were not keen to take possession of the site due to its hazardous condition, allied to potential adverse publicity that might be directed towards the appointor. Despite granting an extended timeframe for the borrower to achieve a suitable planning consent the borrower failed in their efforts. The property was sold at auction. As it transpired the buyer was the original borrower who was successful at auction against other bidders. In this specific set of circumstances, no contract for sale was required as the price achieved in the room was accepted by the receiver and vendor as the best price achievable. It was therefore treated as a redemption. Rather unusually the borrower offered at auction sufficient to allow a full redemption but at the time of the auction process was not actually in a position to pay the monies over to avoid the auction process. As a consequence, despite the higher bid only the redemption settlement sum was taken to cover full repayment of the loan to include all costs and fees. This was and is a very unusual set of circumstances.

In the bridging market, very few lenders deal in the straightforward. Cases are often complex, with layers of intricacy and detail. Often this detail is picked up in the underwriting process, but sometimes it is missed and – when it comes to recovering a debt – this detail can be the difference between success and failure. It’s a receiver’s job to uncover this detail and find the best way forward for all parties involved.

Vic Jannels, CEO of the ASTL
A version of this article appeared in the March digital edition of Mortgage Introducer

 

Bridging completions fell in 2020 but applications increased

Bridging completions were £2.88bn in 2020, down from £3.99bn in 2019, but applications grew by more than 11% on the previous year.

This is according to the latest figures compiled by auditors from data provided by members of the Association of Short-Term Lenders. The data shows that completions in 2020 fell by 27.9% on 2019 and that bridging loan books dropped to £4.48bn, a decrease of 2.5% on the previous year. The value of applications in 2020 increased to £25.82bn, up from £23.19bn in 2019.

The data shows that the surge in applications in Q3 last year went on to drive a 34.9% increase in completions in Q4 – there were £918m of completions during the quarter. Applications in Q4 2020 were at £6.69bn, down by 12.7% on Q3, but they were still up by 22.9% on the same quarter in 2019. Average LTVs fell slightly in Q4 and have now dropped to below 59%.

The value of loans in default in Q4 2020 increased by 13.9% on Q3 and was 23.8% higher than the same period the previous year as borrowers continued to feel the financial impact of the pandemic.

Vic Jannels, CEO of the ASTL says: “The Q4 lending figures give us an opportunity to review the performance of 2020 as a whole. Completions were down on the previous year, which is to be expected given the periods of national lockdown. However, applications were actually higher than in 2019, which reflects the enormous potential the bridging market has to provide customers with a funding solution through these difficult times.

“We must, however, remain cautious. The effects of economic slowdown are starting to be reflected by the value of loans in default and, while the roll out of the vaccine for COVID-19 continues at pace, a return to normal levels of economic activity seems unlikely before the summer, so these trends may persist for several months.”