Bridge Loans in UK – Nationwide Finance by Whitehall Capital .pdf
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Nationwide Bridge Loans in the UK
We find no more attractive value proposition for alternative credit investors than real estate
bridge loan funds. As traditional banks continue to withdraw their lending facilities for all but the
largest bridge finance transactions, an opportunity has emerged for wealth managers and their
clients to benefit from the returns of real estate bridge financing which until recently was only
accessible to large institutional investors.
Bridge loan providers charge substantial interest rates for this service, typically between 1 per
cent and 1.5 per cent per month on the outstanding capital. This is why real estate bridge loan
funds are able to offer their investors very attractive yields, typically between 8 per cent and 10
per cent p.a., even net of all fund fees and commissions for the bridge loan fund management
company. At the same time, investors can be assured that their money is financing real estate
projects in the form of loans backed by the security of a first mortgage claim against a bricksand-mortar real asset that can be seized and sold to recover their investment in case of default
on the loan.
Additional assurance for the investor is provided by the fact that the bridge loans are rarely
extended for amounts more than 60 per cent of the independently appraised market value of
the property at the time the loan is originated. The short term nature of the loan makes it very
unlikely a decline in the real estate valuations of a particular market so severe and rapid as to
cause the value of the pledged building to drop below the amount of the loan before the
building could be sold in case of a default.
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