New loan demonstrates the robust Fitzrovia Finance lending approach
Fitzrovia Finance, the property backed lending experts are delighted to announce a major new loan on their platform. This substantial loan – the loan’s initial value is just over £1.6m – demonstrates many of the characteristics Fitzrovia Finance is looking for in its loans offered to investors: the borrower is an experienced developer who has offered up additional security on a loan with a development LTGDV ratio below 60%.
The loan on the Fitzrovia Finance platform is for a residential development in Bushey, north of London and is for £1,602,410.
The 15-month duration loan will help fund the construction of 7 new apartments. Investors can earn 5.5%* returns on this and other property backed loans on the Fitzrovia Finance platform.
The LTGDV is 59.13% which is below our usual maximum level of 65% and we’ve classified the loan as being in risk band A+ - see the box below for a quick background note on how we classify risk. The loan is secured by a first charge and supported by additional security in the shape of a personal guarantee worth £424,000, as well as a cost overrun guarantee, both from the borrower.
The project itself is in Claybury in Bushey, Hertfordshire, and comprises 2 one-bedroom apartments, 4 two-bedroom apartments and 1 three-bedroom apartment. The development will be finished to a good standard with all the units benefiting from high quality kitchens and appliances as well as private allocated parking, with the two and three bed units benefiting from two parking spaces. In addition to a small communal garden, all but the three-bed unit will benefit from private amenity space in the form of terraces and balconies.
The borrower is a new special purpose vehicle company established this year in order to develop the subject property. The borrower's principals are the owners of an experienced property development firm with a substantial track record having completed multiple schemes in North London.
According to Brad Bauman: “Historically, the team at Fitzrovia Finance have made several loans to the companies controlled by the borrower's principals, all of which have been managed to the team's satisfaction. The project demonstrates many of the key features we look for in a loan; established managers, additional guarantees, a sensible loan to value ratio and a quality development for the end buyers. With interest rates looking to stay low for the foreseeable future, we anticipate that the demand for higher yielding, secured loan-based investments, will remain strong.”
To date Fitzrovia has funded over £130 million in development and bridging loans. All loans on the platform feature at least 150% security coverage, aligned with our 7 Step risk control process which includes extensive vetting of borrowers. The team behind Fitzrovia Finance have over 100 years of combined expert experience in the secured property lending sector.
What are the risk ratings?
We have developed the grid below for the classification of our loans by risk bands and we have identified each category by their level of LTV (Loan-to-Value).
Fitzrovia Finance launched to institutional investors in Sep 2017, and in May this year we opened our doors to private investors, who from an investment of £1,000, can benefit from attractive risk-adjusted returns of up to 5.5% p.a.*
You can view a selection of our previously fully funded developments here.
*The indicated return is an estimate that investors can earn, after fees but before bad debt and tax. View our platform statistics here for more detail.