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․ PROSPECT CAPITAL ⭢ Co-Lending Proposition

2018


․ PROSPECT CAPITAL ⭢ Co-Lending Proposition

2018

․ PROSPECT CAPITAL ⭢ Co-Lending Proposition


Creating opportunity â­˘ 01


⭢ Co-Lending Proposition

About us ․ Prospect Capital has built an excellent reputation for ethical, responsible lending in the specialist finance and bridging market. The high level of service we offer our clients with a commitment to deliver on the terms set out to the borrower in a timely manner, has proven to be a winning formula. We value our strong reputation for successful property-backed lending. Our ongoing success and ability to generate strong deal origination coupled with high quality scalable underwriting, has now created the opportunity for a limited number of new co-lending relationships. Our typical co-funders include HNW individuals, private clients, family offices and institutions.

Our ethos ⭡

․ Long-term

relationships

․ Strong

expertise

․ The highest integrity

Through our straightforward and transparent approach, we seek to forge long-term relationships with borrowers, investors, partners and co-lenders alike that will benefit all stakeholders.

Our senior team brings together over 70 years of experience through a unique combination of professional lending and legal expertise.

We believe in ethical lending of the highest integrity. We always seek to ensure that our clients can succeed in their ventures through our involvement.

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• PROSPECT CAPITAL

Our co-lending proposition ․ Prospect Capital provides attractive and secured returns for its co-lending partners, significantly derisking the loan by supporting each loan with its own capital.

How it works ․ As a co-lender you are free to choose your level of participation in any co-lending opportunity that we offer.

Co-lending proposals are presented to co-lenders only after they have been through our underwriting process and following approval by the Prospect Capital credit committee. We will always fund part of every loan we present to a co-lender. The amount of funding provided by Prospect Capital will depend on the overall Loan to Value (LTV). We usually hold a joint first charge with our co-lender but will always subordinate our loan to theirs. This means that your LTV is effectively decreased by our provision of the top tier of funding for the loan. It also means that our capital has to be lost in its entirety before any of your loan is at risk.

As a co-lender, you will never fund more than 60% LTV. In fact your typical co-lending participation will be significantly less than this 60% cap. The actual rate of return that you receive as a co-lender will depend on your loan LTV. Please see the table opposite for some examples:

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*This rate of interest assumes a headline rate of 11%


⭢ Co-Lending Proposition

⭣ Co-lender interest rate: ⭣ Co-lender % LTV

⭣ % of Headline Interest Rate Co-funder receives

⭣ Actual interest rate Co-funder receives

60

75

%

Or less

50

65

%

40 Or less

%

%

7.2

%

Or less

%

8.3

%

55

%

6

%

04


• PROSPECT CAPITAL

Security ․ All loans will be secured by way of a first legal charge over one or more property assets. The responsibility for perfecting the security rests with an independent team of external lawyers who are appointed to act jointly for Prospect Capital and our co-lenders. For UK loans this would ordinarily be Lightfoots, who are specialists in this field (please visit www.lightfoots.co.uk for more information). In addition to the legal charge we apply the following minimum criteria: • Properties are valued by a RICS-qualified surveyor from a firm that holds adequate professional indemnity cover. • An all-risks insurance policy with the lender’s interest noted. • In certain circumstances, additional criteria will also apply. Prospect Capital continue to monitor and manage the loan throughout its term. This includes periodic audits by a specialist team within Prospect Capital. In the rare event of a loan default and the termination of a facility, Prospect Capital will enforce the security and sell the asset, if that is what is required to ensure payment of the loan. In the unlikely event of a shortfall post recovery, Prospect Capital will carry all losses until its portion of the loan has been eroded in its entirety. Only in this event will our co-lender risk any erosion of their capital. These combined factors result in an extremely low risk environment for the co-lender.

⭢ 05


⭢ Co-Lending Proposition

Procedure ․ Initially, all of the loan application documentation, AML, CDD and supporting documentation are collated by the client relationship manager and then submitted for underwriting and review by our inhouse Chief Legal Officer. Once this process has been completed the case is reviewed by Prospect Capital’s credit committee. If a loan is approved by our credit committee, a funding request will be forwarded to our co-lenders for their consideration and approval. Once our co-lender has agreed to the loan a facility letter will be forwarded to the client and Lightfoots instructed to commence with the loan and security legal documentation. Once the legal work has been completed, Lightfoots will report back to both Prospect Capital and the co-lender individually confirming everything is in order. Both Prospect Capital and the co-lender send their part of the loan directly to Lightfoots the day before completion is due. It is important to note that the market we operate in requires a high level of expediency and therefore we ask for an early response from our co-lending partners to any funding request.

⭢ 06


• PROSPECT CAPITAL

The Market ․ The traditional routes to lending provided by banks have changed. There remains a high demand for bespoke secured lending which offers a strong return on capital to counter the void created by the banks’ contraction in the market.

․ Our lending proposals include: ⭣

01

․ Residential ⭣

02

․ Commercial

03

․ Bridging ⭣ ⭢

․ Development

04

07


⭢ Co-Lending Proposition

⭢ 08


• PROSPECT CAPITAL

Loan Examples: ․

01 ⭢

Client requires bridging finance to purchase a house for which he expects to obtain planning consent to convert to nine apartments in South East England ⭣

Asset value

£1,450,000

Required advance

£925,000

Security

1st charge

Loan provided by Prospect Capital

£140,000

Loan provided by co–lender

£785,000

Co–lender LTV

54%

Headline interest rate

11%

Co–lender interest rate

8.3%

Term

12 months

⭢ 09


⭢ Co-Lending Proposition

02 ⭢

03

Client requires bridging finance to secure a property with development potential whilst he obtains planning permission. ⭣

Asset value

£3,583,000

Required advance

£1,600,000

Security

1st charge

Loan provided by Prospect Capital

£160,000

Loan provided by co–lender

£1,440,000

Co–lender LTV

40.2%

Headline interest rate

11%

Co–lender interest rate

7.2%

Term

18 months

Client requires bridging finance to secure the purchase of a residential property requiring a light refurbishment and once tenanted, he will move to a commercial / buy-to-let mortgage.

⭢ 10

Asset value

£6,250,000

Required advance

£3,500,000

Security

1st charge

Loan provided by Prospect Capital

£500,000

Loan provided by co–lender

£3,000,000

Co–lender LTV

48%

Headline interest rate

12%

Co–lender interest rate

7.8%

Term

9 months


• PROSPECT CAPITAL

13 Broad Street St Helier JE2 3RR

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․ Prospect Capital

info@prospect-capital.co.uk www.prospect-capital.co.uk This product is not regulated by the Jersey Financial Services Commission and is subject to terms and conditions. If you are in any doubt about the consequences of using this product you should take advice from a lawyer, specialist or appropriately qualified advisor first. © Copyright 2018 Prospect Capital


Co-Lending Proposition

The Market ․ The traditional routes to lending provided by banks have changed. There remains a high demand for bespoke secured lending which offers a strong return on capital to counter the void created by the banks’ contraction in the market. We recognise that every borrower’s finance requirements are unique. At Prospect Capital we don’t try to make our borrowers’ situation fit our structure, instead we specialise in offering the best and most efficient lending solutions for each unique situation, whilst ensuring that the security of the loan remains our number one priority.

․ Our lending proposals include: ⭣

01

․ Residential ⭣

02

․ Commercial

⭣ ⭢

․ Developments

04

04

Prospect Capital Co-Lending Proposition  

Prospect Capital has built an excellent reputation for ethical, responsible lending in the specialist finance and bridging market. Through o...

Prospect Capital Co-Lending Proposition  

Prospect Capital has built an excellent reputation for ethical, responsible lending in the specialist finance and bridging market. Through o...