Wellesley is leading the way in property lending. Andrew Turnbull, managing director of Wellesley, tells Peer2Peer Finance News why the property market is all about building relationships
WELLESLEY has been synonymous with peer-to-peer investing since it launched back in 2013, although over the last couple of years its strategy has been to diversify its offering into retail bonds as well. The platform is leading the way in property lending, following a repositioning of its lending criteria, to focus on larger residential property development loans.
According to Wellesley managing director Andrew Turnbull (pictured below), the firm is now taking a “very different approach” to its platform, which involves building strong relationships with property developers up and down the country, and minimising the risk to its investors.
“We had to reposition ourselves in terms of finding the right type of borrowers,” says Turnbull.
“We had to change out some of the members of our team and hire more experienced people. And in terms of the way we underwrite deals, we have had to completely change the amount of time and the amount of analysis that we spend on deals and we spend a lot of time performing analysis on those deals which just leads to a different process.”
Wellesley has always acted as an intermediary between property developers and investors, but over the past few years this strategy has evolved quite considerably. Where once the platform chose smaller developers and a larger number of projects, it now works with larger development firms who have more experience and better capitalisation.
Or, as Turnbull puts it: “Our average borrower used to represent the ‘S’ in SME, but now they probably represent the ‘M’.”
This shift in the business happened after Wellesley spotted a major gap in the lending market.
“We found that property developers could not get the funding that they wanted from banks – but that didn’t mean that they weren’t bankable,” explains Turnbull. “Property development lending is one of the toughest asset classes for banks to lend upon because of capital requirements.
“We felt that there was a big gap in the market to provide a good service to those property developers.”
Once Wellesley had spotted this gap in the market, it was just a matter of sourcing reliable developers who could meet the high standards of the platform’s investors.
For Turnbull, this meant travelling across England and meeting with potential borrowers, building relationships and – more importantly – building trust. The platform currently works with just “two handfuls” of developers, says Turnbull, and this highly-vetted group ensures that Wellesley has ongoing access to a series of quality loans. This is what helps Wellesley stand out from the rest of the crowded property development marketplace.
“Clearly, we were not the only ones to realise that property lending was underserviced in a number of areas,” says Turnbull.
“But what you’ll tend to find with many of these platforms is that many of them tend to specialise in a certain area of property lending. So, some of them focused on buy-to-let mortgages, other ones like doing bridging loans and very short-term funding. There are not so many that do property development – we are only really focused on doing residential development.
“And what we’ve found with property development lending is that what’s absolutely key is understanding the capability of the person you’re dealing with and what sort of people they are.”
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