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The Six-Monthly Henry Stewart Briefing

Raising and Structuring Finance for Property Transactions

Chair

Malcolm Wilson
Managing Director -Financial Services
CBRE Financial Limited

Speakers

Andrew Blenkinsop
Area Director, Specialist Property Finance
Bank of Scotland

James Dakin
Partner, Real Estate Banking
Nabarro Nathanson

Andrew Fairley
Director of Joint Ventures
Bank of Scotland

Robert Field
Partner and Head of Tax
Lawrence Graham

William Newsom
Head of Valuations
FPDSavills

Brian Rubins
Managing Director
Southern Funding Limited

Alan Russell
Partner and Head of Property Finance
Drivers Jonas

Ed Stacey
Managing Director, Derivatives
Eurohypo AG

Damian Thompson
Director, Leveraged Finance and Property Securitisation
The Royal Bank of Scotland

Tony Wood
Economist
The Royal Bank of Scotland

 

CURRENT ECONOMIC BACKGROUND, INTEREST RATE TRENDS AND PREDICTIONS

  • The outlook for UK and European economies over the next two years, including predictions of UK interest rates
  • The impact of this on the performance of UK commercial property markets
  • The potential impact of structural and regulatory changes to the UK commercial property market
  • The outlook for the UK residential market

Tony Wood
Economist
The Royal Bank of Scotland

 

WHO ARE THE PRINCIPAL SENIOR DEBT LENDERS, WHO IS FUNDING WHAT?

  • The growth in the debt mountain accelerated by 17% last year. Who were the main contributors to this?
  • The number of active bigger ticket lenders increased by 1/3 last year. Who were the main new entrants?
  • Nearly half of all lenders are seeking to securitise their loan books. Who are the main conduit lenders?
  • How active are the German lenders these days? Likewise, UK lenders, the Americans and other international lenders?
  • William Newsom names the players active in the commercial property lending market and those that have left and why

William Newsom
Head of Valuations
FPDSavills

 

WHAT’S HAPPENING IN THE SECURITISATION MARKET

  • Has the CMBS (Commercial Mortgage Backed Securities) market finally reached critical mass?
    - recent and expected activity
    - implications for borrowers
  • Single borrower commercial property securitisation transactions
    - a worthwhile alternative to bank funding?
    - when do they make sense?
  • The capital markets in sale and leaseback transactions
  • A/B Note structures – a new source of mezzanine finance

Damian Thompson
Director, Leveraged Finance and Property Securitisation
The Royal Bank of Scotland

 

FINANCE FOR COMMERCIAL and RESIDENTIAL INVESTMENT

  • Big and small ticket loans - the differences
  • Interest rates and other costs - where is the market today?
  • Criteria
  • Debt service and amortisation
  • Security
  • Loan-to-value
  • What is a good covenant?
  • The portfolio effect
  • Residential investment strategies
  • Examples of recent cost effective deals

Brian Rubins
Managing Director
Southern Funding Limited

 

FINANCE FOR COMMERCIAL AND RESIDENTIAL DEVELOPMENT

  • What can be financed and how?
  • Legal entities
  • The business proposal – essential content and information requirements for submission
  • Cashflows
  • Appraisals
  • Conditions precedent
  • Managing the banking relationships

Andrew Blenkinsop
Area Director, Specialist Property Finance
Bank of Scotland

 

TRENDS AND CHANGES IN LOAN DOCUMENTATION

  • Developments in the LMA (Loan Market Association) documents
  • Impact of securitisation
  • Current negotiation trends
  • Security over cash

James Dakin
Partner, Real Estate Banking
Nabarro Nathanson

 

HEDGING STRATEGIES

  • Interpreting the yield curve
  • Forward rates - a decision making tool
  • The hedging decision
  • Simple hedges
  • The future - property derivatives

Ed Stacey
Managing Director, Derivatives
Eurohypo AG

 

FUNDING BEYOND STRAIGHT LOANS – WHAT IS POSSIBLE? WHY DO IT? WHEN TO DO IT

  • What is available?
    - mezzanine loans
    - forward funding
    - equity investors
  • Who are the players?
    - banks
    - corporate
    - private equity
    - limited partnerships
  • What are providers looking for?
    - trading approach
    - margin, fees, profit share
    - skilled partners with good track record
  • Typical structures
    - security
    - returns
    - priorities

Alan Russell
Partner and Head of Property Finance
Drivers Jonas

 

CURRENT THINKING ON TAX PLANNING AND MITIGATION

  • Tax avoidance - case law developments
    - Macniven v Westmoreland
    - Halifax
    - Barclays Mercantile
    - Scottish Provident
    - Debenhams
  • Tax avoidance - legislative approach and the disclosure of “schemes”
    - Income Tax
    - VAT
    - Other taxes
  • Property holding vehicles: the impact of SDLT
    - Migration offshore
    - Practical pitfalls
  • Property holding vehicles: Property Investment Funds (PIFs)

Robert Field
Partner and Head of Tax
Lawrence Graham

 

JOINT VENTURE FUNDING – WHAT IS HAPPENING AND WHAT IS POSSIBLE

  • Joint Venture funding
    - integrated debt / equity product
    - sector focus
    - The credentials of the participants
  • The principles of a JV proposition
    - product offering
    - types of structures
    - key parameters
    - target characteristics
  • Current issues
    - market dynamics - property sector / housing sector
    - property performance - rental / capital values
    - yields and interest rate curve
    - portfolio management
  • Future opportunities - what is possible
    - contra-cyclical sectors
    - value creation propositions
    - geographic expansion
    - public sector

Andrew Fairley
Director of Joint Ventures
Bank of Scotland