Arc & Co. and Pluto Finance complete on two development-to-investment loans, totalling £18m, to a private residential developer. The two Build to Rent schemes are in the South East of England. Combined, they will deliver 181 new homes.
The new facilities – structured by Arc & Co. and financed by Pluto – enable the development of two Build to Rent schemes, as well as an investment loan for longer-term holding on completion of construction. The loans have been arranged at a loan-to-value ratio of 60%, with the development investment finance secured at market-leading pricing on a three-year term.
Arc & Co. expects Build to Rent to continue to be a core focus among real estate lenders, as affordability concerns resulting from the cost-of-living crisis encourage more people to rent. Developing a quality product and building sustainable communities will remain at the forefront of investor appetite, as new supply for affordably priced housing lags behind demand.
“Build to Rent continues to be a key focus for lenders, attracting some on the most competitive financing. It is great to complete on these two facilities with a bespoke funding solution that not only reduces costs but is also in line with the long-term strategies of both Pluto and the client. We look forward to working with them both on future opportunities.”Cameron Hayes, Asset Finance Adviser, Arc & Co.
Pluto Finance provided the client with a bespoke development-to-investment facility on both transactions. This approach brings significant benefits to the client – notably providing funding certainty following practical completion while rental income is stabilising, a key period in a Build to Rent asset’s lifecycle. Both costs and risks are reduced by arranging investment finance in parallel to development funding.
“We can now finance the entire lifecycle of a Build to Rent scheme by adding stabilisation and investment financing to our existing development offering. This product gives our clients peace of mind (that they have funding secured for the whole project), saves time overall and avoids additional refinance costs (including arrangement and legal fees) once the assets flip from development into becoming a standing investment. It was a pleasure to work with Arc & Co. and the developer.”Guy Norman, Lending Director, Pluto Finance
Based in Mayfair, London, the Arc & Co. Group is a specialist asset finance advisory company. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.
Pluto Finance is a leading provider of finance for housebuilders, property developers and investors. Since inception, Pluto have financed the delivery of over 10,000 new homes. The company is part-owned by the Universities Superannuation Scheme, the UK’s largest private sector pension scheme with over £80bn assets under management.