Claire McGirr recently joined specialist development finance lender BLEND as head of portfolio management from HTB.
She recently sat down for an exclusive interview with The Intermediary to discuss what attracted her most to BLEND, top predictions and tips for the year ahead.
Congratulations on your new role at BLEND. It comes at a time when many banks have been pulling away from development finance and reduced their risk appetite. What attracted you most about Blend?
Thank you. After 25 years in the real estate and development finance industry across several mainstream and specialist banks, I’m delighted to be joining BLEND at such an exciting time for the business and I’m thrilled to be joining two former HTB colleagues who’ve also recently joined Blend: David Alcock as MD and Will Powell as lending director.
Several things interested me about BLEND. First, BLEND has established itself as a through-the-cycle lender that continued to support its borrowers through Covid and was able to support not only its existing borrowers but also new ones.
Right now, the challenging market environment sadly means that many lenders will be reviewing their lending appetite, and we’ve already started to witness that.
Instead, the team at BLEND see opportunities where others may see challenges.
After having spent five years at HTB as head of portfolio management and before that, seven years at Barclays where I worked as a case director within the business support and recoveries team, I wanted to join a lender who can see those opportunities and who is able to back developers to take advantage of those opportunities.
Second, as I mentioned, several of my former HTB colleagues have recently joined BLEND and convinced me that BLEND was a great place to work.
And third, I was attracted by the culture and team spirit at BLEND, a culture that focuses on going above and beyond to back developers.
At Blend, you get the feeling that every team member is rowing in the same direction, the direction of supporting property developers come rain or shine.
I’ve been through various business cycles in my career and look forward to bringing my residential development portfolio management experience to bear across BLEND’S development finance offering.
Where does the BLEND proposition sit in the market? What makes it different?
BLEND was born with the mission to support mid-size property developers and small construction companies who represent the engine of our housebuilding and construction sector.
In 1988, SME housebuilders built 39% of homes in England.
This had dropped to just 12% by 2017, and even further to 10% by 2020 (needless to say that Covid and the current recession have cut it further).
An estimated 22,060 new homes per year were delivered by SME housebuilders in 2019. This drop is equivalent to the loss of at least 64,000 homes per year, compared to if SME housebuilders were still delivering 39% of housing supply.
The gross development value of these lost 64,000 homes is £20bn.
The BLEND proposition is a simple and straightforward one: we back experienced property developers.
BLEND offers development finance for ground-up developments, conversion & refurbishment, land with residential planning permission, bridging, permitted development, and HMOs.
We offer high gearing of up to 70% LTGDV, loan sizes of £1-10m at competitive market rates across the UK.
More importantly, we are true through-the-cycle lenders with the true meaning of the word.
Opportunities clearly exist for experienced housebuilders in the current market. One of the things we’ve been very clear about at BLEND is that it may be a bear market, but it’s not a panic – as we write in the latest edition of our Blend Property Pulse.
We believe the market correction will be mild and localised, as opposed to sharp and nationwide.
More crucially, we think there are bright spots and (many) opportunities, especially in mature areas with good transport links that will remain more resilient.
For example, NHBC new home registrations increased by 33% in Q3, recording the highest number of Q3 registrations since 2007 – registrations rose for every house-type, apartments saw a 114% increase and private-for-sale registrations were up by 26% year-on-year.
Therefore, I think it is crucial for developers to be able to have conversations with lenders who can understand, discuss and occasionally positively challenge what is trying to be achieved to find viable solutions.
What are the challenges for housebuilders in the current market environment?
We recognise that small and mid-size property developers will no doubt be facing severe challenges over the coming months.
We believe that going into year-end many lenders, especially the ones with larger loan books, will be busy stress-testing their portfolios and will therefore be looking to reduce their risk appetite and quite simply lend less.
This will be particularly the case for development finance, which is often seen as the ‘most risky’ segment of real estate lending, and which is also subject to the most stringent collateral requirements by regulators under Basel III and its risk-weighted assets constraints.
Therefore, building relationships with solid and trustworthy lenders who will be able to support a project from start to finish is now more important than ever.
And this is also part of what I’ll be doing here at Blend as we look to continue supporting new and existing customers.
How can lenders support developers right now (aside from providing funding)?
The current challenging environment is the perfect opportunity for lenders to ‘show their true colours’ and support property developers.
Having witnessed several business cycles myself, I know the clients we support in the tough times and during the cycles like we are in currently, often become our most loyal.
That’s why what’s happening in the markets right now is a great opportunity for us at Blend to show what being a true through-the-cycle lender really means.
There’s one thing for sure: the current environment doesn’t budge our attitude or appetite to lending at BLEND.
Our flexible and diversified family office-backed source of funding means we will continue deploying capital, supporting our existing customers with their growth plans and assisting new ones who are being left out in the cold by other lenders or just not adequately serviced according to their needs.
