Bridging Loans Help Developers Prepare for London Olympic Games
Later on this year, Britain is expected to host the next Olympic Games. Britain’s Olympic Park is located on the East End of London; the location is expected to raise a great deal of revenue and as such, the area has investors flocking to it. Many of these investors are backed by funding from bridge financing, reports My Introducer (a website that reports on the latest in financial news). This wasn’t entirely unexpected; with the European dept crisis, many are finding themselves reaching out to bridge financing as a source of funding.
With the economy in the unstable state it’s in, banks all around the world are tightening up their policies and taking out a loan is now becoming more and more difficult. As such investors are turning to alternate lenders who are more willing to give out higher loans at less strict criteria (meaning investors are almost guaranteed the loan). Consequently bridge financing are becoming more and more popular.
Bridging finance is a type of loan that is used to maintain liquidity while waiting for an anticipated inflow of cash. Investors plan to use bridging loans in the same method. With the European dept crisis at hand not many businesses are able to fund their projects. However, with the expected influx of money the Olympic Games is set to bring, investors are able to afford the loan.
A London based bridging lender, Montello Bridging Finance, has just issued a 2 million dollar bridging loan for the redevelopment of three terraced houses and two commercial properties in Hackney. The loan has provided much needed funds to the development. The loan has allowed for maximum investment in order insure maximum returns on the properties. Come the London Olympic Games, the properties will rise exponentially in value. It is expected that the returns are enough to repay the loan, the loan interest and still have enough left over to be considered a significant profit.
Managing Director of Montello, Christian Faes, gives insight on the arrangement:
“We understand that we are not perceived as a development lender in the marketplace…Whilst development funding is not a core business for us, we are certainly able to do these sorts of deals. I imagine that we will be doing many more deals like this in the future.”
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