Every successful building project starts with a strong foundation. Jay Patel, relationship director at Wellesley, explains why the same rule applies to alternative lending…
IT’S NO SECRET that some of the best UK property investments are currently to be found in the north of England. Wellesley is just one of the alternative lenders taking advantage of the Northern property boom, but it is not in the market for short-term rewards. Through a series of lasting partnerships and long-term investments, Wellesley is laying the foundations for ongoing growth in the Manchester area.
“Manchester’s potential is great at the moment,” says Jay Patel, relationship director at Wellesley. “There is a very real need for property in Manchester and there is certainly a demand there. And Manchester is a global brand. You recognise it overseas – I dare say partly because of the football club and partly because of the government drive to incentivise overseas investment into the Northern Powerhouse.”
In March 2017, Wellesley completed a £39.9m funding package with construction firm The McGoff Group to fund a 368-unit apartment complex in the region. Situated on the banks of the River Irwell between Manchester and Salford, the Manhattan-style complex will include studio and multi-room apartments, as well as a series of commercial spaces on the ground floor. The project has been split into two phases, with 160 apartments constructed in ‘phase one’ and the remaining 208 apartments created during ‘phase two’. Already, around 90 per cent of the units have been sold to a mix of both onshore and offshore investors.
The early success of this project will be welcomed by Wellesley’s property bond investors. But this was no happy accident.
Wellesley’s loan officers are well versed in due diligence, and place huge value on choosing borrowers who have a strong track record. In this sense, the McGoff loan represents a typical project for Wellesley.
“What lured us toward the project in the first instance was the experience of the developer,” explains Patel. “McGoff are regional developers who have undertaken a number of transactions of this size and ilk which appeals to us. These guys do this day-in, day-out, so it made sense to focus on someone like this.
“We are looking to focus on more regional developers of this size, with healthy balance sheets that are able to stand up should things go awry.”
In fact, Wellesley was so impressed with McGoff ’s pedigree and potential that it has already provided funding for another project with the firm, and Patel is confident that they will work together on a number of Manchester-based projects in the future.
“In lending there are two types of relationships: a transactional relationship or a relationship lender,” says Patel. “Transaction banking is a one-off thing that does not tend to involve repeat clients. Relationship lending is different in that you actually secure that long-term relationship and you can focus on multiple projects with the same client, so you gain a greater insight into the business. As a lender, this gives us more control over how they operate, and as the borrower, it gives them a reason to trust us.”
Wellesley takes a hands-on approach to its loans, and it has appointed an independent monitory surveyor who conducts monthly site visits. The lender also maintains its own regional presence in Manchester, allowing Patel to receive ad-hoc updates from the site.
This combination of hands-on expertise and relationship building has the dual effect of appealing to both investors and borrowers. As more and more alternative lenders target property developments in the Northern Powerhouse, it is this experience that will ensure that Wellesley remains ahead of the curve in Manchester and beyond.
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