POSITIVE SIGNS

Keith Sangwin reflects on anencouraging start to the year inthe asset finance sector

SPONSOR - ASSET -STRUCTURE

How UTB put the customer firstwhen evaluating finance proposals- Paul Turton

Asset Finance Development Finance

Broker Promotion

ARE YOUREADY TOCHALLENGEYOURSELF?

All you need toknow about UTB’s 2019 BrokerPromotion

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Structured Finance

COMPLEX SCENARIO, SIMPLE SOLUTION

Gerard Morgan Jackson on how UTB find simple solutionswhere other lenders can't

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ALEAGUEOF OUROWN Robert Owen, ManagingDirector of Mortgages &Bridging talks teamtactics

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MEET THE SPECIALISTS

The team taking UTB's mortgagesand bridging products to brokersnationwide

Mortgages & Bridging

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We’ve always taken the view that whilst it’s importantto keep a close eye on the political and economiclandscapes, we wouldn’t allow activity in Westminsteror Brussels to divert us from our own plans. Ourobjective was to keep growing the Bank by increasinglending, developing product choice and innovatingour service offering and that’s exactly what we did.Our recently published results show that we grew ourloan book by 20% to over £1bn in 2018. It was lessthan a third that size in 2014. Consequently, weincreased our operating income in 2018 by 22% toover £61m. Every division of the Bank achievedgrowth in some measure with some breaking recordsalmost monthly.

Our hard work didn’t go unnoticed. UTB won anunprecedented ten industry awards across ourlending and deposits businesses last year. Theseincluded four for our second charge loans, AssetFinance Deal of the Year, Development lender of theYear, three for our deposit products and service andthe title of ‘Specialist Bank of the Year’ for thesecond time at the Bridging & Commercial Awards.In the last few weeks we picked up our first awardof 2019 when we were named ‘Best Secured LoanLender’ at the Mortgage Strategy Awards for thesecond year running.

During the year we created a new Motor Financedivision based in Bolton, we launched new mortgageproducts with a move into first charges and wedeveloped our savings offering by taking new ISAsubscriptions for the first time and sealing asuccessful partnership with Hargreaves Lansdown tooffer our deposit accounts via their innovative ActiveSavings platform. We recruited more great peopleacross the Bank and we’ve just moved into additionalspace at our City offices to provide much needed deskand meeting space.

We continue to be a very visible specialist lender.Our thought leadership through the media and ourown customer communications has beencomplemented this year by members of the UTB teampresenting at several industry conferences and roundtable events. Nine of us representing the Bank, ourlargest delegation ever, have just returned fromMIPIM in Cannes, billed as the ‘world’s leadingproperty market’, where we jointly hosted an eventwith James Andrew International for over 600 leadingfigures from the UK’s property sector. Our messagecouldn’t be clearer. Whatever happens over thecoming months, UTB is open for business.

Having prepared ourselves for what might have beena very challenging year, 2018 proved to be a successful one

for UTB on many fronts.

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INSIDE this issue…

Mortgages & Bridging Rob Owen onhow UTB are investing in peoplePage 03

Guest Article Brian Berry, CEO of theFederation of Master Builders, explainswhat Permission in Principle means forSMEs Page 04

Development Finance Putting thecustomer first when evaluating financeproposals - Paul Turton Page 06

Asset Finance Keith Sangwin reflectson the positive signs in the assetfinance sector Page 08

Structured Finance Gerard MorganJackson on how UTB find simplesolutions where other lenders can'tPage 09

The Meeting Place The Mortgages &Bridging sales team Page 14

News, Events & Market InformationBroker Promotion, Roadshows, Awards,MIPIM and the latest statistics Pages10, 13 & 15

Welcome

OUR BOOKSTAYS OPEN

Harley Kagan, Group Managing Director

03

A LEAGUE OF OUR OWN

Our mortgages and bridging team has recently seenan influx of new talent - in football parlance, theGaffer is setting-up for a Champions League spot.

With our position in the second charge sectornow well established, the next chapter in UTB’sMortgages & Bridging story is going to be anexciting one. We therefore need the right people,the right structure, the right technology andabove all, the right attitude to take our business tothe next level. Our commitment to deliveringoutstanding products and service to customersand brokers has taken UTB from zero to secondcharge hero in little more than four years soactually, I think it’s all coming together nicely.Our most recent signing is Avison Warren who hasjoined us from Accord Mortgages. He has taken onthe new role of Mortgage Operations Managerand is working closely with Buster Tolfree andothers focusing on the delivery of fintech anddigital solutions projects as well as processimprovements as we prepare for the developmentand launch of various new products anddiversification of our distribution. Talking of which…

Martin Sim’s appointment as NationalDistribution Manager was a bit of a giveaway thatthe products coming in the next stage of ourevolution are going to appeal to a very wideaudience. Master Brokers and packagers remainhugely important to us and the second chargesector particularly. We’ve structured the KeyAccounts team with Jigar Patel at the helm andhe’ll make sure our valued partners remain verywell looked after. Where we see opportunities nextare the networks, clubs and DAs who very soonare going to want to know a lot more about UTB

and what we can offer and it’s important thatwe’re organised to manage that demand.Simon Burnell joined the team to help us ensureour current range of products stayed up toscratch in this fast-paced environment and towork with the senior team designing anddelivering the products that are going to make themortgage and bridging markets really sit-up andtake notice this year.

Of course, every fan likes to talk about theirnew signings but let’s not forget that theMortgages & Bridging team at UTB is now nearly60 strong. Mike Walter’s BDM team is the biggestwe’ve had covering more of Great Britain thanever before and it won’t be long before we’reserving over 1000 broker firms and introducersbetween us. On the bridging side Gavin Diamondand the team has continued refreshing andimproving the offering and have introduced anenhanced application process to allow thosecustomers who don’t have their own solicitor (ordon’t wish to use their own solicitor) to also usethe firm the Bank intends to use, thereby savingcosts, improving efficiency and speeding-up theprocessing too. In Q2 we’ll start offering bridgingloans in Scotland with BDM Paul Mansellproviding support on UTB products every week tointroducers across the border.

The team’s more experienced case managers havenow become ‘Underwriters’ with individuallending mandates, a rarity in the bridging industry and something which can cut down thejourney time from application to offer tocompletion still further. More good news forbrokers and borrowers.

Despite the political uncertainty the keyeconomic conditions of low inflation andunemployment and the absence of house pricebubbles has created a uniquely stable lendingmarket. UTB sees this as a good opportunity andwe wouldn’t be investing so much in people andtechnology if we believed that politicaluncertainty would be the deciding factor in oursuccess or failure. We think there’s a good chancethat UK mortgage and bridging lending mightactually grow a little this year. But even if UKlending growth is static, or worse, it shrinks,there’s still going to be something like a £250bnmortgage market and a £4bn bridging market togo around. That’s a substantial market by anystandards and whatever happens, at UTB we’ll beaiming to grow our slice of it this year.

Mortgages & Bridging

If you’ve been keeping an eye on ‘appointment’ announcements forthe last few months you can’t fail to have noticed that UTB has

signed some top players.

Robert Owen, Managing Director – Mortgages & Bridging

“…it won’t be longbefore we’re serving over1000 broker firms andintroducers between us.”

PERMISSION IN PRINCIPLE ANDWHAT IT MEANS FOR SMEs

‘Permission in Principle’ (or PiP as it’s known forshort) is a new route to planning permissionintroduced in June 2018. It is available for housingdevelopments of fewer than 10 units and isdesigned to separate consideration of the ‘principleof development’ (i.e. is this site suitable for newhousing?) from decisions around the technicaldetail of the development (i.e. are the specificdetails of a proposed development suitable for thissite and in accordance with local policies?)

Why was it introduced?We know that one of the greatest obstaclesfacing many house builders is the prohibitiverisk involved in bringing forward planningapplications, and that risk and cost are oftenhugely disproportionate on the smallest sites.Outline planning permission was originallymeant to provide a means of managing theserisks, but over time even obtaining an outlinepermission has come to involve the submissionof large amounts of information and detailedpre-application discussions, creating significantupfront cost in return for an uncertain outcome.

Many smaller house builders are unable tospread these risks over a number of sites anddifferent applications. SME house builders arelikely to be financing applications through their

own funds or private loans and so the risk ofinvesting in a planning application and notreceiving permission can be quite prohibitive.PiP is intended to address precisely these risksand is designed to be closer to the old fashioned'redline' type application.

Did the Federation of Master Builders play apart in the introduction of PiP?Yes it did and it’s something we’ve been talkingabout for a while. PiP has followed directly fromthe call by the FMB for a return to the principlesof the redline application for outline permission.Indeed, discussions over what has become PiPstarted as far back as 2015, after theGovernment signalled its willingness to look at a‘redline-type’ application. The FMB and others in

the industry were involved in early stagediscussions as to how this could work. What we have now differs somewhat from the idea originally discussed, a result ofhaving been adapted to fit a number of

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Brian Berry – Chief Executive of the Federation of Master Builders (FMB)

Before the FMB, Brian worked at the Royal Institution of Chartered Surveyors (RICS) where he was Head of UK Public Policy. Brian regularly provides commentary on construction issues

for TV, radio, national and trade press.

Guest article

“PiP might proveto be one of the mostbeneficial changes tothe planning system in

recent years…”

United Trust Bank has brought together adiverse group of property and constructionexperts to offer their experience and collectivewisdom on a range of industry topics. These‘Wise Owls’ share their interesting andinformed opinions on issues covering manyfacets of the housebuilding, development andproperty investment industry via bi-monthlyemails to our brokers and developer customersand exclusive articles in our Specialist andBreaking Ground magazines.

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other purposes, including the Brownfield Register.However, it still largely accords with the keyprinciple of reducing risk for smaller scaledevelopers. There is even hope that over time, ifPiP is shown to provide enough certainty, thatlenders may be willing to lend on the basis of PiP,allowing the applicant to invest in the morecostly Technical Details stage.

So, although it has changed from theoriginal proposition, it is still animprovement?Yes indeed. We believe that for many housebuilders and developers undertaking smallersites, PiP might prove to be one of the mostbeneficial changes to the planning system inrecent years. It has been designed to reduce theupfront costs and hassle involved in getting an‘in principle’ decision, thereby reducing some ofthe risks involved in planning and allowinggreater investment in the technical detailsprocess, once the principle has been established.It is also available to be applied to any site onthe Brownfield Register to encourage thedevelopment of those sites identified as suitablefor housing. The Housing and Planning Act 2016also allows for PiPs to be automatically placedon all eligible sites allocated within local andneighbourhood plans, although this element isyet to come into effect and has possibly beenshelved for the time being.

How does it work?In effect, it’s a two-stage process to fullplanning permission. A PiP application consists

of a two-page form containing basicinformation about the site, a plan whichidentifies the site in question, and a fee. Thestatutory time limit for PiP applications to bedetermined is five weeks. The grant of PiP willlast for three years, during which time adeveloper will need to apply for a ‘TechnicalDetails Consent’ (TDC) to convert this into a fullplanning permission. The focus of PiP is strictlylimited to location, land use and amount ofdevelopment. All other matters are dealt with atthe TDC stage.

Has it been welcomed by everyone?In general yes, although some local authorities,perhaps not unexpectedly, have not beenuniversally positive about the new applicationroute, which is one reason why you might notyet have heard of it. In addition, there are boundto be some teething problems and its success willalways be dependent to some extent on its beingimplemented roughly as intended.

How will you know if it’sworking as intended?We believe that this new PiProute, as set out, will proveto be a significantadvantage to the industryand more particularly theSME housebuilding sectorgoing forward. We willmonitor this closely and we’dreally like to hear fromdevelopers and other property

professionals with their views on PiP and how it’sbeing implemented in their areas. At the FMB wesee it as one of a number of steps which canhelp to encourage and reinvigorate the SMEhousebuilding sector for the good of the country.

Guest article

“There is even hope that over time, if PiP is shown

to provide enoughcertainty, that lenders

may be willing to lend onthe basis of PiP”

Surveys of SME housebuilders often identify ‘theplanning system’ as being the biggest barrier tothe success of their businesses. That I can fullyunderstand. What surprises and frustrates mehowever is that even now, with more choice in themarketplace than we’ve seen for a decade, manysmall to medium sized housebuilders say they stillhave problems accessing development finance.The most recent FMB ‘State of Trade’ surveyhighlighted that 1 in 5 SME housebuilders havehad projects stalled or delayed due to fundingrefusals or delays. That shouldn’t be happening. Selecting the right lender to approach in thefirst place is critical. An understanding of thetypes of projects they support, their minimum andmaximum loans, the gearing they’re prepared togo to and their willingness to take mezzaninecombinations are all basic considerations and willtell you if you could consider them as a financepartner. Add the nature and dependability of theirfunding, their track record and experience duringchallenging markets and the service and supportthey provide through the application stage andonce the project is underway, and you should beable to work out if you’d actually want them as afinance partner, especially if the going gets tough. Once you’ve made your selection you cansubstantially increase your chances of a successfulproposal by understanding what the lender’s keyconsiderations are when making credit decisions.All lenders will be slightly different of course but

how we do things at United Trust Bank isremarkably straightforward. What may surprisesome is that for us it’s the client, ‘the borrower’,rather than the development which is mostimportant. When we look at a proposal it’s always Sponsor – Asset – Structure in that order.Let me explain:

Credit CommitteeUnited Trust Bank’s Credit Committee meets dailyto consider the new proposals being presented. Itcomprises originators and credit specialists whomeet daily to discuss proposals under thechairmanship of the Bank’s Head of Credit.Proposals are presented in person with the aim ofreaching a consensus decision. If successful, theBank can issue committed facility letterdocumentation within 24 hours but often this isdone before the close of business.

This is different to most High Street andalternative lenders where Credit Committees areoften well away from the front line. Furthermore,all members of the team are encouraged to attendCredit Committees whether they are presenting ornot. Anyone can comment and influence anapplication and this dynamic ‘peer review’ helpscredit policy evolve and react quickly to changesin the market place.

Sponsor – Asset - StructureAs stated previously we always begin with the‘Sponsor’. If we like them, we move on to look at theasset, the development they want funded. If we havetwo positives at that point, we look at the structureof the deal. We approach each proposal in that orderevery time because if we are uncomfortable with thesponsor, the asset and the structure are secondary.However, if there’s a strong sponsor and a morechallenging asset and/or structure we will flex onthose to get a proposal through.

What makes a strong sponsor?We ask some basic questions. Who is deliveringour exit? Who are we relying on to repay thesubstantial sums they wish to borrow? On whosefront door am I knocking if there are issues duringthe lifecycle of the project? Can the borrower demonstrate past successesin terms of similar projects in similar locations,design, size, layout and specification? If they are

Why UTB always put the customer first whenevaluating finance proposals

06Development Finance

“Looking at howborrowers have managedchallenges in the past isvery important to us whentrusting a sponsor withour money on future

projects.”

Paul Turton, Head of Sales – Property Development

SPONSOR - ASSET - STRUCTURE

07 Development Finance

new to the Bank, can anyone vouch for them? –we will often have industry contacts in commonwho we can rely on to give us a positive reference.Has the borrower performed through the cycle? -the property market is cyclical with good timesand bad. What have their behaviours been likewhen times have got tough? When the project oreconomy got bumpy how have they responded? -Looking at how borrowers have managedchallenges in the past is very important to uswhen trusting a sponsor with our money onfuture projects. Has the borrower built a personal and/orcompany balance sheet representing pastsuccesses through recycling profits? Whoever isdelivering our exit needs some skin in the game –this can be hard cash, soft equity throughplanning gain or a mix of the two. When all said and done, once we’ve asked allthe questions and seen the answers we stillultimately lend on trust. We are trusting someonewith our money with an expectation that we willget it back. Yes, we take a charge over the site andpossibly other security as well but this is our fall-back, our secondary source of repayment. We arebacking an individual or individuals to deliver thecompletion of a scheme that can be sold orrefinanced in order to return the money borrowed.Our aim is to identify and back the right people asthis is most likely to mean we are building theright homes in the right locations.

Will you lend to inexperienced borrowers?With so much uncertainty at the moment, ourpreference is to lend to experienced developers.However, over the last few years we have helpedseveral fledgling developers to thrive. Theseborrowers were able to assure us of theirsuitability by demonstrating relevant transferableskills, solid business acumen, firm financialfoundations and by appointing teams of provenexperienced professionals and contractors capableof plugging the knowledge gaps where theborrower has less first-hand experiencethemselves. If the team, the asset and thestructure stacks up, the whole can be greater thanthe sum of the parts and worth a closerinspection.

And what makes a good asset in UTB’s view?The asset conversation centres around two simplequestions - ‘can they build it?’ and ‘can they sell it?’

Can they build it? What is it? Where is it? How much is it? How bigis it? Are there any planning or construction risks?What are the Section 106 conditions? We look at the borrower’s and professionalteam’s track record for delivering similar schemesand an even closer look at their in-house orappointed construction director or projectmanager. This role, the person with overallresponsibility for the build program, sequencingand generally gluing together the trades,professions and getting materials to site is pivotalin the success or failure of the development. Procurement – self-procured packages ormain contractor or somewhere in-between? If it’sa main contractor, what’s their track record? Past

successes of the borrower and the builder(if the two are separate) are important indicatorsof capability.

Can they sell it?Are the projected prices realistic? Is there a provendemand? If not, is the developer looking to createdemand, if so, how? What’s the competition?Typically, when we are looking at the local market wetend to look within a two mile radius of the proposedsite and need comparable evidence supporting theprice points. Two potential exits for the funding arepreferable. Sales to owner occupiers and BTLinvestors is usually the first exit route. Longer termrefinancing supported by rental yield is another sorental values are important when considering ourfall-back options.

StructureThis is where we analyse the full cost of a projectand how these are to be funded. The equity mix isusually a combination of the developers, third partyprivate or institutional investors and the Bank so it’simportant to understand the relationships here. We interrogate the borrower’s developmentappraisal, procurement plans, monitoring & control,equity contribution (and where that is comingfrom), liquidity and of course the funding requiredfrom the Bank and the proposal of how and whenthey will repay it. We generally expect the project to be fullycontributed from the outset so that a project isproperly funded from the day one purchase,through the construction programme and into thesales phase. We typically expect the developer’sequity to go in up front together with any juniordebt towards the purchase and we then providesenior debt as the balancing item towards thepurchase together with 100% of the constructioncosts. Senior debt is typically up to 90% loan to costwith an upper limit of 60% loan to grossdevelopment value. Most developments have three distinct phaseswhich are planning, including satisfaction of pre-commencement conditions, construction and sales.We can wrap debt around these phases throughtailored products including bridge to develop,construction finance and sales period finance.Where the developer needs additional funding overand above our typical metrics then we can suggestother solutions. These might include:

1. Leveraging planning gain if it’s not alreadyincluded in the funding package

2. Additional leverage against pre-sales of privateunits off-plan with deposits held

on escrow3. Additional leverage against agreements to lease if

we are funding a mixed use, residential ledscheme

4. VAT loans where applicable 5. Junior debt on top of our senior debt through

preferred partners6. Equity contribution through the customer and

suitable partners

Accepting that the property market is cyclical, and itcould be argued that we are nearer to the top of

the cycle than the bottom, if we are at an earlystage of a structuring conversation where theborrower is still in negotiation with the vendorthen we might suggest overage or joint venturearrangements (build now pay later) where thevendor retains an interest in the project. Conversations around structuring will alsoinclude terms & conditions attached to thesanction which typically include a valuation, legalconditions associated with the first legal charge,debenture and any recourse mechanismsassociated with overruns together with a costreport from the monitoring surveyor.

Assuming it is a ‘Yes’ from the Credit Committee,what happens next?All being well from credit we produce ‘short-form’in-house facility letter documentation. We do notover engineer facility letters with unnecessaryconditionality and we are pragmatic aroundwarranty requirements. Our committed documentscan be issued within 24 hours of a sanction. Other lenders often produce short-form orlong-form Loan Market Association (‘LMA’) facilitydocumentation which can add considerable timeand costs through additional professional fees onthe part of both the Bank and the borrowerthrough fees for their appointed solicitors reading,explaining and negotiating bespoke terms. We then allocate a dedicated Case Managerwho is committed to ‘project managing’ theConditions Precedent’ attached to each loan so thatthe finance is proactively managed to firstdrawdown. Thereafter, the same Case Manager isresponsible for project managing the monthlyconstruction drawdowns.

Uncertainty aheadNo one can say with any certainty what the UK’seconomy, property market or the politicallandscape will look like in two to three years’ timewhen many projects in embryo now willeventually come to market. Experienced lenderslike UTB have seen uncertainty before andcontinue to support the right people building theright homes in the right places. Our long-termsuccess is dependent on the long-term success ofour clients and their ability to consistently findopportunities and deliver projects whateveroutside forces are at play. When we agree toinvest in a development it’s more accurate to saythat we’re investing in the person or personsbehind it more so than the actual bricks andmortar. We’re in this business for the long term,not the duration of one project, and that’s why atUTB we always put the ‘sponsor’ first.

“Experienced lenders likeUTB have seen

uncertainty before andcontinue to support theright people building the

right homes in the right places.”

Positive results have stemmed from the momentumthat was created last year by activities such as ourtwo ‘Owl Points’ promotions and our price matchoffer attracting a lot of interest. This coupled withour outstanding service and willingness to discussdeals with our introducers resulted in increasingnumbers of brokers using us, many of them new tothe Bank and doing their first transactions with UTB.

The higher volumes of business are keeping theunderwriters and our recently expandedadministration team on their toes. We’ve alwayssaid that we wouldn’t let increasing volumes havea detrimental effect on our quick decisions andspeedy pay outs and I’m confident we’re living upto that promise. There are now four people in theunderwriting team talking to brokers throughoutthe day; Peter Price, Lee Chandler, Charlotte Fentonand Hayley Macfarlane, plus divisional head Martin Nixon. We’ve also had three new staff join

the admin team in the last few months. DanielIdowu joined us in November becoming UTB’sofficial 200th staff member and Lotty Teague and Tony Blake have also joined us this year.

The FLA’s March figures show a 9% increase innew asset finance business compared to January2018 with lots of activity in our key marketsincluding plant and machinery and commercialvehicles. It’s good to see we’re not the only busyfunder at the moment! The first quarter of the yearis generally a busy one in those sectors anyway butthe growth in new business comparing January2019 to January 2018 is encouraging. With 26%growth in plant and machinery business and 21%growth in commercial vehicles it would suggestthat many UK SMEs are brushing aside any Brexituncertainty and continuing to invest in newvehicles and machinery. We’re certainly seeing a lotof transactions for new vehicles so that companies

can keep up with Euro 6 emissions standards. It’sgreat to see the FLA reporting that the Broker channelis still growing at the fastest rate too (13%) despiteincreasing competition from direct and vendor funders.

Bigger deals can be the icing on the cake of agreat month and one recent case made a significantcontribution to a record-breaking February. You mayknow that as well as funding high end performancecars and luxury marques we occasionally fund somevery expensive classic and vintage cars. We recentlyfunded a very rare classic car with a loan of well over£1m. This type and size of deal certainly isn’t ‘meatand drink’ for us, but for the right customers we’rehappy to consider larger transactions on moreunusual assets. We encourage Brokers to call andtalk directly to an underwriter about any deal they’relooking to place. We’ll usually give them anindicative decision over the phone and a formaldecision within 4 hours.

08Asset Finance

2019 has got off to a flying start for the Asset Finance divisioncontinuing a run of excellent business months which started

back in May 2018.

Keith Sangwin, Head of Sales – Asset Finance

POSITIVE SIGNSIN THE ASSETFINANCE SECTOR

Asset Finance BDM Klara Hanrahan was determined to show a successful EastAnglian brokerage what a great service the Bank could offer them and theirclients. Since taking over the patch at the start of 2018 Klara had made a point ofmaking several trips up the A11 to Norwich to meet the team at Credo AssetFinance and in October last year managed to persuade them to submit a suitableproposal which was to refinance some yellow plant. The deal was accepted but atthe last minute the customer decided to capital raise via a remortgage instead.Frustrating for all of us but it happens!

Then, in mid-December, Credo presented another proposal, this time to assist acustomer with the purchase of a new FMX Volvo 8x4 Tipper costing £148,000 plusVAT financed over 5 years. The deal received swift approval and was paid out inthe first week of January. As a bonus for Credo the deal also qualified them for a

‘Golden Owl’ in UTB’s Winter promotion which they exchanged for a classyFortnum and Mason hamper to share amongst the team.

Lewis Buckley of Credo Asset Finance said: “I was really pleased to completethis deal with UTB, especially as we’d been really close to getting one over the linein October. The Bank agreed it quickly, the supplier was paid on time, our customerwas very happy and on top of that we received a superb Fortnum’s hamper forthe team. We’re looking forward to working with UTB again in the future.”

Klara Hanrahan commented: “Credo are a great company and I knew they’d bean excellent fit for UTB. But I know what it’s like, brokers have lots of choice andwhen they’ve been happy using other funders for years it’s a leap of faith to trysomething new. I’m grateful to Lewis for giving us that opportunity and now withthis deal completed, and another one agreed and going through admin, I’mconfident that we’ll build a strong, long term relationship to benefit Credo, theircustomers and United Trust Bank.”

Persistence eventually pays off

There are different reasons why other lendersultimately fail to support their clients. Sometimesit’s because they were not prepared to deliverwithin tight deadlines. Other times it’s because thecustomer, the proposal or the security package arejust too intricate to justify the substantial amountof work a lender may have to do for what they seeas a relatively modest return.

Although we frequently structure facilities inexcess of £10m, we are also happy to apply the sameintelligence, dedication and ingenuity to equallymultifaceted cases of a lower quantum, taking onthe deals other lenders may have deemed toocomplex, hard or just too small to get involved in.Here’s one example of the team stepping up to theplate and committing to delivering a relativelysmall, yet structured facility despite obviouschallenges in meeting tight timescales and a needto adapt to rapidly changing circumstances.

The Structured Finance team were approached bythe prospective borrower on 13th December 2018seeking funding for the acquisition (and VATliability) of a redevelopment opportunity in Essex.The borrower had exchanged contracts on thepurchase of the commercial/light industrial site withthe completion date set for the 7th January 2019.

Three other lenders had previously expressed aninterest in funding the site acquisition for theborrower, negotiations had become protracted andultimately all parties declined to assist.

Given timescales were already tight and theapproach of Christmas would most likely causefurther delays over the festive period, JamesGreenyer from our Structured Finance teamarranged to meet the borrower within 24 hours ofthe initial enquiry being received in order to ascertainthe extent of the borrower’s property portfolio.

The borrower had recently completed a

residential development of nine houses. Threehouses had sold and the other six were under offer but were unlikely to complete in time for theproceeds to be put towards the site acquisition inearly January.

Having considered what facility we couldstructure on the assets available, James’ proposal was for the Bank to take a charge over the six‘under offer’ houses (with title insurance in placeto expedite matters) plus a charge over the sitebeing purchased, albeit without a valuation or due diligence in order to accelerate the process.

With the approach accepted by the borrower, theteam commenced work in parallel with the Bank’ssolicitors and valuers who were appointed on the18th December. After receiving further information,credit approval was sanctioned on the 21st December.

Due diligence carried on over the Christmasbreak with the team on target to enable drawdownof the loan by the 7th of January completion date.However, the borrower decided he wished todelay the completion until later in the month andsubsequently agreed with the vendor to pushcompletion back to the 31st January 2019.

This provided us with a more relaxed timescale,but the loan amount required changed severaltimes as some of the six houses under offerexchanged contracts and completed during themonth. The team continued to maintain a closedialogue with the borrower and in the eventrevised the security package to three remaininghouses, plus a charge over the target site andthree further unencumbered development sites.

Upon completion the client commented: “I wasvery happy with the service provided by UnitedTrust Bank as other lenders were also approachedto provide the facility, but they all declined toproceed due to the timescales required.”

Structured Finance09

On the SF desk we look at each case on its individual merit, meaning we often see cases where other lenders have failed to

fully understand the client’s requirements.

Gerard Morgan Jackson, Head of Structured Finance

COMPLEX SCENARIO, SIMPLE SOLUTION

Borrower • Developer

Amount • Circa £1.2m – Acquisition Loan • Circa £600k – VAT Loan

Loan Type • Structured Finance

Location • South East

LTV • 51% (combined)

Project • Acquisition of a commercial/lightType industrial business park for

redevelopment

Special • Loan includes VAT fundingFeatures • Multiple amendments of the

facility structure to accommodatethe changing security

• Due diligence relaxed on somesecurity in order to reduce costs andexpedite the process

“This was a challenging case in terms of theinitial timescales and thereafter the variations inthe loan requirements which necessitatedamendments to the loan offer and securitypackage. However, by maintaining a frequentcommunication with the client and ourprofessional team we demonstrated a flexibleand entrepreneurial approach to ultimately assist the client with their purchase of the target site.”

James Greenyer summarised:

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‘Best Secured Loan Lender’two years running United Trust Bank won yet another award for its secondcharge mortgage product bringing its tally to ninewinner’s trophies since launching into the specialistmortgage sector in 2016. UTB was named ‘Best Secured Loan Lender’ at the 2019Mortgage Strategy Awards held on the 26th March2019. It’s the second year running the Bank has beennamed the top lender for second charge loans by theMortgage Strategy awards judges.

UTB News

In addition to the Bank sending a large delegation to MIPIM (moreabout that on page 13), Paul Turton presented at the Federation ofMaster Builders (FMB) Eastern Conference in October and has takenpart in their round table events this year. UTB sponsored the HomeBuilders Federation Policy Conference in March with Noel Meredith andPaul Turton attending on behalf of the Bank. Buster Tolfree and MikeWalters from the Mortgages & Bridging Division led a presentation onthe place for Fintech in specialist lending at the Mortgage SolutionsSpecialist Senate in March. The ‘invitation only’ event was attended byover 40 of the industry’s most senior and influential figures. Martin Sims, Kerry Bradley, Nick Warren and Paul Delmonte havealso informed and educated brokers and introducers on our range ofspecialist mortgage and bridging products at several events withFinancial Reporter and the Ingard Training Academy and GavinDiamond is taking part in a Bridging & Commercial short termlending round table in April. Look out for UTB ‘on the road’ at moreevents throughout this spring and summer.

UTB - On the road Staff from United Trust Bank have attendedand presented at a variety of industryroadshows, round tables and conferences inthe last few months with more alreadyplanned for the rest of the year.

Buster Tolfree, Commercial Director – Mortgages, United Trust Bank, commented:“I’m delighted that we have won this award for the second year running. Having made a positive impact when we first entered the market, we’ve allworked extremely hard to keep improving our service and our products and to champion secured loans in the minds of brokers and consumers. “This award vindicates the effort put in by the whole team and the tremendous support we receive from our Master Broker, Packager and introducerpartners. My thanks go to everyone who has helped us achieve this second victory and promise that there will be more exciting news to come fromUTB this year!”

The Bank grew its loan book by 20.0% to £1.034bn and returned a 21.9% increase in Operating Income to £61.2m.

The 19.3% increase in profit before tax to £31.4m is more thandouble the figure posted in 2015 and the key measure of Return onAverage Equity was an impressive 22.3%.

Chief Executive Officer, Graham Davin, commented: “UTB had an excellent year despite considerable economic and

political uncertainty. Our lending and deposit books both exceeded£1billion and although we incurred additional expenses associatedwith the creation of our new Motor Finance division, our costincome ratio of 43.9% reflects increasing scale effects throughoutthe business and most particularly the Mortgage division.

“I would like to thank our customers and brokers for their supportand to all our staff, across all departments, for their contributiontowards achieving these results. Notwithstanding the economic andpolitical headwinds, we are planning for another year of growth andsolid returns and I am pleased to say that 2019 has got off to apromising start.”

The Bank’s Report and Accounts for 2018 can be found on our website.

UTB lends itsway to asuccessful year

United Trust Bank’s2018 resultsindicated anotherstrong performancedriven by sustainedgrowth in lendingand effective costmanagement.

11 UTB News

One more for thetrophy cabinet!

A team from UTB’s PropertyDevelopment division were delightedto put their general knowledge togood use at the annual Knight FrankProperty Professionals Quiz.

The team comprising of Phil Bird, Gary Smith, Luke Benton-Drury, Derek Budd and Knight Frank team member Matt Connor competed against seventeenother teams from the banking world over 8 rounds of testing questions on everything from pop music to general knowledge. After an exciting final chase to the finish, Team UTB were triumphant, carrying off the coveted trophy. Phil Bird, UTB Property Development Manager, said: “Knight Frank put on a really good quiz and an entertaining evening and it was a great opportunityto catch up with peers from around the industry and beat them! It was a team effort with everyone making a significant contribution in achieving UTB’sfirst victory and we look forward to defending our title next year.”

AVISON WARREN JOINSUTB AS MORTGAGE

OPERATIONS MANAGER

Avison Warren has been appointed to the newlycreated role as the Bank prepares for thedevelopment and launch of various new productsand the diversification of its distribution. He will befocusing on the successful delivery of fin-tech anddigital solutions projects, alongside processimprovements within the Banks Introducer-ledproposition. Avison has joined UTB from Accord Mortgageswhere he was Operations Manager for LendingShared Services and responsible for the new lendingdepartment including oversight of 100+ staff acrossmanager, mortgage underwriter, administrator,performance coaching and process improvementpersonnel.

Buster Tolfree, United Trust Bank CommercialDirector – Mortgages, commented:“Avison brings a great deal of real-world experience indelivering significant IT and change projects in a highgrowth mortgage business. His skills and knowledgemake him a valuable addition to the team of recognisedindustry experts we’ve brought together at UTB to enableus to move our mortgage business up to the next level. “We are investing in great people and creatingcutting edge digital solutions to enable us tocontinuously improve our offering to brokers andcustomers. I’m looking forward to revealing more ofour plans as we progress through 2019 and I could notbe more excited about the next chapter of UTB’smortgage story.”

12Broker Promotion

ARE YOU READY TO CHALLENGE YOURSELF?

IS THERE A SKILL OR SUBJECT YOU'D LOVE TO LEARN MORE ABOUT?

LIVE AND LEARNUnderstand more with UTBLearning to scuba dive on the Great Barrier Reef;attending a triathlon performance training campin California; completing a wildlife photographycourse in the Masai Mara or maybe somethingcompletely different. If your ambitions forpersonal development are a bit higher than nightschool pottery lessons, our exclusive brokerpromotion for 2019 could be just what you’relooking for. Throughout this year, brokers registered withUTB can earn entries into our exclusive Live andLearn promotion to win a once in a lifetimepersonal development opportunity to the value of£5,000. In addition, there will be severalopportunities throughout the year to win a varietyof enjoyable and enriching experiences a littlecloser to home. So whatever training or development courseyou’ve always wanted to take and whatever skillyou’ve always wanted to learn, United Trust Bankcould be your perfect partner in 2019.

CHOOSE FROM A RANGE OF ENRICHING LEARNING EXPERIENCES

You can enter our Promotion by visiting our stand at this year's key financialservices exhibitions and taking part in our regular broker mini polls and

other special events throughout the year. Find out more below:

Broker Prize Draw www.utbank.co.uk/liveandlearn/ Broker Mini Polls www.utbank.co.uk/giveandlearnminipoll2019

NEW 2019 BROKER PROMO

13 UTB Events

‘The world’s leading propertymarket’ turned 30 this yearand United Trust Bank wasin Cannes in greaternumbers than ever before.As well as the back to backdaytime meetings, UTB andJames Andrew International(JAI) jointly hosted anevening event attended byover 700 of the UK propertyindustry’s leadingparticipants. We spoke toPaul Turton, Head of Sales -Property Development,about his week at MIPIM.

A CANNESDO ATTITUDE

“The great thing about MIPIM is that it brings together representativesof every element of the property industry from the largest institutionalinvestors to the smallest developers across all types of property. Italways reminds me of when you get to the end of a film when thecredits roll and you’re presented with the hundreds of people from avast number of different disciplines who had to come together tocreate the movie you just watched. MIPIM reminds you that when yousee a new development project coming out of the ground it is theculmination of effort by easily hundreds of people including investors,financiers, architects, planning consultants, lawyers, accountants,suppliers, tradespersons and of course the developers themselves. All ofthem are represented in some way at MIPIM and that’s not anexhaustive list. Everyone you speak to at MIPIM knows someone elseyou should speak to. Each new contact tops a pyramid of potential newcontacts you may one day be doing business with. There’s no otherevent like it in the world which is why it has become a must for somany people in the property industry.

Isn’t it just for big business?“The larger developers and national house builders are were of courseas were the institutional investors, clearing banks, professionals andmajor suppliers. However, there’s also a growing presence in the SMEsector. UTB predominantly lend in the SME space. We work withregional house builders and developers on residential or residential ledmulti-unit projects together with investors in commercial property.One of the benefits of hosting the event with JAI was that it gavemany people another reason to go to MIPIM. The same can also be saidfor the lunch the Bridging team hosted for key brokers in their market.We sent out invitations and a clear message that we were coming toCannes to talk business. That UTB are supporting SME developers andinvestors with projects this year, next year, the year after that and soon whatever happens in Westminster and Brussels. Many people andcompanies who also operate in the SME market hadn’t been to MIPIM

before because they weren’t sure it would be worth the trip and theirtime. Our invitation and knowing that we’d be there was enough to getthem on a plane or train heading to Cannes. Having set ourselves atarget of hosting 500 guests we ended up with over 700 on the night.The feedback has been outstanding. Our biggest challenge will befitting everyone in the same venue next year.’’

So what was the general vibe across the UK housebuilding industrywith the path through Brexit still very unclear?“I’d say there was a strong sense that whatever happens, everyone wasjust going to get on with it. That despite the uncertainty it wasn’tstopping anyone starting projects, committing money and planning forthe future. That’s always been our view at UTB as we lend through theups and downs of the economic cycle and it was great to see that ‘cando’ attitude expressed across the industry.”

THE MEETING PLACE

The decision to deploy multi-skilled BDMs far andwide combined with product and serviceenhancements has certainly paid off. The teamsupports nearly 1000 brokers and introducersbetween them, with that number increasing daily.There was an 45% increase in bridging originations in2018 compared to 2017 with significant volumes ofbridging business generated outside of the traditionalLondon/South East hot spots. Mortgage business hasalso seen strong growth, propelling UTB to becomethe leading second charge lender in the UK primemarket, a claim supported by the team’s frequentaward wins now numbering ten to date.Mike Walters, Head of Sales – Mortgages & Bridging,joined UTB in April 2017 as a BDM covering Walesand the South West and was promoted a year later.Mike lives in South Wales and is keen to maintain thestrong broker relationships he’s formed over the years.However, his focus now is managing the nationalBDM team and developing and delivering the salesstrategy with a view to extending the Bank’s reach tobrokers and introducers across England, Wales andScotland. With so much activity planned for 2019, it’sup to Mike and his team to ensure brokers knowexactly what UTB can do for them and their clients.“I’m really excited about this year.” He says. “It’s thenext chapter of UTB’s mortgage and bridging storyand there are more new products and serviceenhancements coming soon. The Mortgages &Bridging team is still growing and now reads like aWho’s Who of some of the best people in the industry.And although our position in the Second Chargesector is already well established and our bridgingproposition now more popular than ever, we’re justgetting started!” Nick Warren serves brokers in London and theSouth East and says he’s never lost that ‘buzz’ ofdoing deals. “From the age of 17 when I worked part-time selling new homes, I knew business developmentwas the career for me. Even now I get excited whenthe mobile rings and it’s a new case to review. I thinkI’m one of those people who are wired to thrive on

prospecting and then closing deals”. Nick’sbackground has gained him valuable experience in thefield of development finance as well as bridging andnow specialist mortgages. “One of the manyadvantages UTB has over its competitors is the broadspread of property finance knowledge, skills andcapability it offers. We work closely with theDevelopment Finance team, for example assistingdevelopers with bridging finance to enable them toacquire sites and opportunities before they’re readyfor a fully worked up development finance proposal.And with the Bank having a dedicated StructuredFinance division as well, we can work collaborativelyproviding solutions to clients with complexrequirements when other lenders either don’t havethe skills or the inclination to do so.” Paul Mansell is based in the North East with apatch stretching from Doncaster to Inverness.Although he’s already providing support to brokers inScotland, he’s excited about UTB soon offeringbridging loans secured on properties across theborder. “There’s been a really positive reaction toUTB’s mortgage offering and for our bridging service.However, to date we’ve only been able to providebridging loans to borrowers in Scotland if they’vebeen secured against properties located in England.Developing our bridging service so that we can offerloans on Scottish properties gives as new market totap into. I’m expecting an equally positive responseto that”, he says. “Brokers like the way we do things.We offer quick and straightforward applications,common sense underwriting, outstanding serviceand a strong focus on great outcomes for thecustomer. What’s not to like?” With around 250 brokers and introducers to lookafter, Kerry Bradley knows that the key to doing herrole well is be organised. “I like to book three brokermeetings a day and as they can be anywhere fromCambridge to Norwich and down into Kent, stayingon top of my diary and letting everyone know where Iam and how to get hold of me is really important. Iwish I could do more short notice meetings but it’s

not easy when I plan so far in advance. I’m not averseto getting together out of normal office hours if Ineed to though. Getting a deal over the linesometimes means going the extra mile, or extra 50 orso miles in my case!” Paul Delmonte joined the team last year and isnow busy introducing brokers in the North West andMidlands to UTB’s products and service offering. It’sanother large area stretching from around Blackpoolto Manchester, Birmingham and Leicester. Paul’scareer has included various roles with specialistlenders and an eleven-year stint with a high streetbank. “I prefer the diversity of what I do nowcompared to my time in the mainstream sector”, saysPaul. “But something which was ingrained in mewhen I was just starting out in financial services hasstayed with me”, he says. “To build and maintain agreat relationship with a broker or any otherprofessional you must first understand what makesthem tick and then you must understand theirbusiness. Everything else can be based on that. Myunderwriting experience also serves me well whenbrokers are looking for a swift indication on a deal. Aquick ‘no’ is always appreciated.” Owen Bentley is the newest member of theMortgages & Bridging sales team having joined inApril this year. Owen’s 12 years in the mortgageindustry have been spent mostly on the brokingside of property finance but moved to lending twoyears ago with Precise Bridging. He now covers theM4 corridor, South West England and South Walesfor UTB. “My broking experience stands me in greatstead when discussing deals as I’m able to see andcommunicate deals their way”, says Owen. “I lovebeing involved in deals and being able to find andmodel a solution. These are exciting times for UTBwith lots of new products being developed.Hopefully my broad range of experience ineverything from residential to BTL, commercial andbridging will enable me to help maximiseopportunities for brokers. I’m looking forward tothe challenge!”

Meet five members of our Mortgages & Bridging team

Nick Warren Business Development Manager

Mike WaltersHead of Sales

Paul Mansell Business Development Manager

Kerry BradleyBusiness Development Manager

Paul Delmonte Business Development Manager

Owen BentleyBusiness Development Manager

14Mortgages & Bridging

Last year United Trust Bank merged its specialist mortgage and bridging teams to create a new Mortgages & Bridging division providing brokers and customers with a range of long and short term property funding

solutions. As well as offering more choice, the Sales Team, now six strong including Head of Sales Mike Walters,supports brokers across most of Great Britain.

SOUTH WEST

0.5%ANNUAL-1.4%MONTHLY

YORK

SHIRE

& THE HUMBER2.9%

ANNUAL-0.1%MONTHLY

2018

21,514

2017

21,752

House price change 2019

Q4 2018 GROWTH

DEVELOPMENT

Q4LAND VALUES

GREENFIELD

2018

EAST MIDLANDS

-0.16%ANNUAL-0.3%MONTHLY

AVERAGE PRICE£228,147

PRICE CHANGE P.A.1.7%

PRICE CHANGE P.M.-0.8%

LONDON

1.6%ANNUAL-0.3%MONTHLY

Gross mortgage lending

House price growth

0.7%ANNUAL0.2%MONTHLY*

Mar-19

Source: Land Registry – March 2019

Source: Savills Research - January 2019

PRIME MARKET

UK house price growth remained soft in March

• Annual house price growth remained subdued at 0.7% in March

• Modest 0.2% price rise during the month, after taking account of seasonal factors

• Annual price falls in London and the South East

Source: Nationwide – April 2019

Source: UK Finance – February 2019

Source: Nationwide – April 2019

2018

2017

26,068

24,059

OCT

8.0%

NOV

3.0%

SEPT

-1.0%

DEC

6.0%

2018

2017

23,464

24,2242018

21,198

2017

20,063

* Seasonally adjusted figures

JAN

-1.5%

2019

21,600

2018

21,921

0.0%URBAN

0.1%

ANNUAL GROWTH

GREENFIELD

1.9%URBAN

6.2%

OVERALL LAND VALUESHAVE REMAINED FLAT

IN Q4 2018

15

we understand specialist banking

We understand

United Trust Bank understands that you are lookingto work with an approachable, adaptable anddependable finance partner who will look for reasonsto say ‘yes’ to your proposals. That's why our bookstays open.

Tel: 020 7190 5555Email: info@utbank.co.uk

www.utbank.co.uk