If the past two years have taught us anything, it’s that we have to adapt and change if we want to thrive.
Hodge has been in the commercial and residential investment/development markets for more than 30 years so, as a business we’ve seen a lot – but the past two years has really tested the mettle of both property finance, and investors alike.
At Hodge, we like to listen and when we listen, we like to act. Working in the industry over the past 30 years, I have seen a lot of changes in the wants and needs of property investors – and it is great that as a Bank we can react to those changes quickly and effectively, as we have done so very recently again.
Changes in the commercial property market have given us cause to expand our product offerings and deliver even more of what our clients want. With more investors now spreading their portfolios over a varied range of properties, Hodge has broadened the criteria on one of our development finance products and created a brand new one.
Both exemplify the changing face of commercial real estate lending – and how it’s paramount for banks to listen to their brokers who, in turn, have listened to their clients – and bring about changes that make the products more flexible, more appealing – and, most importantly, exactly what the borrowers are looking for.
The past few years have been very different for all commercial lenders and commercial property investors. It has been a time of reassessing portfolios – for some a time to sell up and move on – for others a time to diversify and buy a mix of properties. We have seen lots of changes in the market, but what was clear to us was how important the relationship between lender and borrower remains.
So, let’s look at the changes and what they mean for our clients
It’s fair to say Hodge has been tightly focused on pure residential development during the past two years. However, we’ve now made changes to the Residential Development loans to incorporate lending on the alternative residential asset class, including student accommodation and retirement living.
We know demand for this is now much greater – and, as a result, we wanted to expand the reach and fund experienced developers across multiple asset classes. There’s an active residential market out there with plenty of experienced developers searching for funding for schemes that previously sat slightly outside of Hodge’s appetite, but this criteria update will change that.
Hodge’s Development Finance loan has been created for experienced developers in England, Scotland and Wales with non-complex ownership structures. The loan is available to Ltd companies, PLCs, LLPs, partnerships and individual borrowers affording leverage up to 80% LTC and 65% LTGDV. It offers a maximum loan of £5million and a minimum of £1million, over a 24 month term.
It is the first of many enhancements Hodge will introduce over the coming months as part of a targeted growth strategy across residential and commercial real estate.
Hodge has also just launched a new Commercial Investment Finance product aimed at experienced property investors who invest in a mix of commercial buildings.
We’ve designed it to help serially active, proven investors buy, manage, refinance or add value to commercial real estate assets such as office buildings, industrial, leisure and mixed-use buildings.
Maximum individual loan size is £5m, with £10m aggregate to borrowers in common ownership. Loan to Value (LTV) ratios of up to 75% are available with loan terms, floating or fixed rate, up to five years. Eligible borrower types include Ltd Co, LLP, sole trader and Trusts with UK based ownership.
We designed this product as we saw a gap in the market in this area of commercial property, where investors who specifically target commercial real estate assets are not well served, despite running highly successful portfolios.
We have a proven track record of a relationship-based approach
Hodge prides itself on taking a very human approach to commercial lending – each client has direct access to a dedicated, experienced relationship manager and each application is personally reviewed and assessed by a specific underwriter who evaluates its merits and risk.
That relationship and one-to-one method really helps to get the best out of the finance product for the investor and is especially suited to active investors who regularly buy, refinance, modify or sell property as that type of investor requires a close relationship with their funder. We think this is even more important at this time of record high property prices as well as the diversification of many investors’ portfolios.
We believe our new products and changes in criteria shows the market that we mean business. That our doors are open to intermediaries and brokers, as well as their clients, who are really looking to shift their property focus. We understand that the market is in a state of flux and want to help those trying to stabilise it.
Kevin Beevers is managing director of commercial lending at Hodge
