In an exclusive interview with BTL Insider, Shawbrook’s MD of real estate Emma Cox, and director and head of structured real estate Piragash Sivanesan (pictured above) discussed the reasons behind the launch of the firm’s new structured real estate team and the professionalisation of the PRS.
The bank unveiled its new structured real estate team last month to enhance its support for professional landlords and property investors seeking larger, more complex finance solutions.
According to Emma, creating the structured real estate team was a natural step for Shawbrook, as over the years, the bank has attracted a large number of repeat borrowers and clients with large loan needs, which require a different, more tailored approach.
“It became part of the natural evolution, to think about how we can handle those types of deals and transactions in a more appropriate way, provide that extra, specialist focus that you need on those larger exposures, and deliver a much better customer and broker experience — hence the creation of the team,” she said.
“We’ve invested an awful lot of time, effort and resources into building a team of specialists that have a lot of experience and deep understanding of our credit risk appetite, and we’ve got some new people joining the team that will bring a fresh perspective on things and bring new opportunities.”
The new structured real estate team was created to provide personalised services for bigger-ticket loans, including the ability to take cases to credit approval before valuation to provide certainty early on.
By having a dedicated team with expertise in handling large loan cases, Piragash and Emma hope to ensure these complex cases get the tailored, in-depth assessment they require, to see if they fit the lender’s criteria and provide the necessary funding in a swift manner.
“We’re incredibly quick at turning around DIPs, but actually, for these larger, complex deals, you almost need to slow down so the execution becomes better,” explains Piragash.
“What we’re willing to do is sit down with those landlords, utilise our expertise to potentially push the boundaries of what we would consider our normal lending criteria, and do sound business. We’ll still give quick answers, but there’s a commitment to really understanding these deals and to see whether Shawbrook can do them or not.
“There's a real depth of knowledge and willingness to do things a little bit differently,” he added.
While the uncertainty still prevails in the PRS, Emma and Piragash confirm that most of Shawbrook’s portfolio landlord clients continue to adapt to the ever-changing environment, and have specific investment strategies in place with a growth mindset.
When it comes to what asset types landlords tend to gravitate towards when diversifying their portfolio, one thing is for certain: they are looking out for properties that offer high yields, to create a level of cash flow that sits above their operating and debt costs.
However, this is not done to the extreme. Piragash and Emma explained that most landlords don’t venture out into BTL investment areas that are completely unfamiliar to them.
“We do see a mixture of commercial and residential, but you don’t get a professional residential landlord all of a sudden waking up wanting to buy a big industrial estate. You don’t tend to get that extreme level of diversification,” Emma elaborated.
“What you might get is somebody that has a residential portfolio who might consider buying a semi-commercial property if it becomes available. They’re [diversifying their portfolios] in a thoughtful way.”
Outside of the current challenges brought on by regulatory, tax and political changes, Piragash claimed landlords also are facing increased competition pressure from big BTR operators, which offer a range of additional amenities to tenants.
As a result, both Emma and Piragash noted that more landlords are focused on providing quality accommodation to their tenants, regardless of which type of BTLs they offer.
“We’ve definitely seen an increase in more of an ethical-type landlord. They really take the quality of the stock they're bringing to market incredibly seriously, and they offer high quality at affordable rents,” said Emma.
“It’s absolutely fine to sit in the social housing, or less luxurious space, but still deliver excellent housing for that price point, and that’s where the best landlords are always cognisant of the market and ensuring the stock matches that appropriately,” said Piragash.
