Eight questions with a stretched senior debt specialist

By Andrew Scotting, head of loan origination

What does Zorin Finance do?
Having lent over £150m in the past 12 months, we are one of the UK’s fastest-growing alternative providers of residential development finance. We specialise in stretched senior debt, lending up to 90% LTC and 70% LTGDV. Loans are available from £1 – £50m for experienced counterparties with good credit history and, while we focus on London and the South East, we also lend across national hotspots.

What purpose do you serve in the development finance industry?
Principally, helping SME housebuilders to work their capital harder via our higher LTC and LTV ratios. This allows them to boost their cash-on-cash returns and spread their capital across multiple schemes. For small- to medium-sized housebuilders with smaller balance sheets, this is a huge selling point.

What are the different types of finance that you offer? Can you explain the differences between them?
About 80% of our lending volume is attributed to development finance and the other 20% to bridging loans. Specifically, our bridging loans are aimed at property developers who are looking to refinance expensive development debt upon practical completion, or require a bridging loan on existing buildings while they obtain or rework the existing planning consent. We also provide bridging loans for tenanted commercial real estate.

What type of developments do you typically fund?
We have funded a wide spectrum of developments over the past six years. Some of our more recent transactions include 74 apartments in Bournemouth, six town houses in Bath, 29 houses in Norwich and countless residential apartments and office-to-residential schemes in London and the South East. We always look for the same thing: a clear exit strategy (typically sales demand), good counterparty experience (including contractor and other professionals) and appropriate ‘hurt money’ in from the developer.

Some of your team have past experience as property developers and investors, what impact does this have on the level of customer service you can offer?
Unlike many of our competitors or high street banks, 80% of our shareholders are or have a background as principal developers. This means we evaluate each case on its own merits rather than taking a formulaic approach. It also means we are more in tune with our clients and their needs and make every effort to tailor our facilities accordingly.

How do you develop and find solutions to meet every client’s specific needs?
While we are hot on due diligence, we are commercially minded and work that little bit harder to find a workaround if hurdles exist. For example, we recently funded a scheme in Hackney which our client felt he could pre-sell 40% of before practical completion. Our valuer disagreed and so, on the face of it, the deal was not workable due to LTV covenants being breached. However, we suggested taking the rental income from another element of the site until the developer’s pre-sale targets were reached and, if they were reached on time, we would reimburse the rental income paid to us up to that point.

What sets you apart from your competition?
Apart from our shareholders’ experience as principal developers (which allows us to better consider every case from the developer’s point of view), what really sets us apart from the competition is the personal investment the CEO and all shareholders make in each and every loan. We don’t simply manage funds on behalf of institutional money. Being structured this way means the CEO is heavily involved in every loan and quick to make lending decisions.

What are the future plans for the company?
We have some very exciting technology plans which are currently in beta testing with a select few clients but, when rolled out across the portfolio, will provide our brokers and borrowers access to a whole suite of information relating to their loans. This will aid transparency and help speed up the lending process, as well as serving as a tool for borrowers to manage their loans on an ongoing basis. Equally, we intend to keep up our growth rate, which will inevitably mean increasing our product offering and branching out into other forms of real estate lending. We’ll be sure to let you know as soon as we do.