The banking and property landscape has been literally turned upside down in the last twelve months with over £10bn of loan sales occurring in Northern Ireland alone and double that if you count the Republic of Ireland. Lets be clear – this is new territory for all of us professionals including banks, estate agents, solicitors and borrowers.
The big question we are now getting every day though as we see the out workings of the Ulster Bank trades is what happens next?
It’s very straightforward actually. The private equity company who now owns your loans, whom you have to repay, will sit back and employ a team of people to look after and manage the loan book. This team of people will contact you the borrower, arrange a meeting and ultimately give you a short period of time to produce a repayment proposal. It’s a very direct process and you must have a plan in place or the company will enforce on the security and threaten you with bankruptcy. In short it’s a very worrying time if you are in this spot, and is putting many people we are seeing over the edge.
At GDP we have been monitoring and preparing for this development over the last two years and we now our own plans in place as a company to help people who are in this position. Both James and I have spent considerable time trying to encourage investors and capital partners to come to this part of the world to help refinance those borrowers who need to exit their private equity positions. Thankfully our prep work is now paying off, as over the last twelve months we have been able to refinance over £130,000,000 worth of property debt away from private equity hands.
Make no mistake, Cerberus, Loanstar, Blackstone, Goldmans and the rest are only here for a short time. They have bought loan books at huge discount and they are trying to make a huge profit on them and get out of here asap – that’s their business plan.
If you’re a borrower, its important you take advice in this regard and if you have a professional team acting for you I would suggest you ask them what successes they have had in this area.
There is one thing sitting in a meeting with a private equity company representing a borrower, its another matter entirely, understanding the process, having a capital partner at hand to bring into play and ultimately settling with the private equity business.
At GDP we walk the talk and in the last few weeks we have been instructed to represent a number of borrowers with loans in excess of over £50,000,000.
Loan Sales are big business, however it’s a fine line between getting a successful outcome for your client and failing miserably. Make sure you pick the right team when you are planning on moving forward.
Conor Devine MRICS