Pictured above Mezzanine finance- the missing layer for many
transactions. Top Nic Rotton, below David Griffiths
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 website.
"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."