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New Notts Business to help investors "be the banker"
13/04/2010
A new Nottingham business aims to help unite frustrated investors and borrowers as it launches a new financial “dating agency”.
Strata Finance, based on Wheatcroft Business Park (Landmere Lane) is a unique and innovative service in the commercial property and financial market. Although the business is new, the management team, led by chartered accountant David Griffiths and former banker Nic Rotton, (both experienced commercial and corporate finance brokers) have been involved in the property market since 1999.
Nic Rotton explains the concept behind the new business;
“In these unprecedented times it is still a struggle for UK businesses to raise money and this has created a unique opportunity for high net worth individuals (HNWI) as investors ask; ‘Where do I put my money?’
“We specialise in funding for commercial property and are increasingly finding bank’s restricting loans to around 60% of the Loan to Value (LTV). When a client needs 70%, for example, we have a shortfall. This shortfall means a mezzanine layer, or “strata” of funding is needed. As a direct response to this, we are now offering this situation as an opportunity to frustrated investors via our property portal www.stratafinance.co.uk
“We’re effectively a dating agency for mezzanine finance opportunities in the UK, offering cash rich investors a way to lend their money directly to those that need it, in short, letting them “become the Bank”.
Strata finds well thought through commercial property transactions which have passed through the due diligence of a main lender but which, because of the currently restrictive nature of Bank lending, is insufficient to meet the client’s full request.
The investor lends their money directly to the borrower on a short-term basis, typically 12-24 months and receives the comfort of a formal legal charge over the property involved, which fully covers the amount lent.
Nic concludes;
“Most importantly the investor can set the rate of interest they want to receive, typically 10-15%. They are not investing in the company or taking an equity stake. As the end of the period of the loan approaches, we work with the investor and the borrower to refinance the property.
“In most cases we expect this to be achieved by the primary lender extending their facilities to repay the more expensive loan. Alternatively we would look to refinance the property to the wider market to repay both the investor and the primary lender.
“We manage the deal with the investor, offering key partners who can support them at each step in the process from valuation to legal advice. Strata is a marketplace, not a bank, so we cannot guarantee what the level of returns will be.”
Submitted by Nic Rotton - Director: Strata Finance Limited