Paul Wilcox

Funding prospects improve for larger projects, says GDP

There are signs of a thawing in the lending market for schemes over £50m as liquidity eases for selected developers, according to Paul Wilcox, partner at GDP Funding in Manchester.

Wilcox said: "With the tightening of the financial market, lenders are being particularly selective about deals. In this current climate, the quality and track record of the borrower are vital. That said, speculative transactions are becoming more difficult to place at reasonable pricing and gearing, even for borrowers with a pristine reputation.

"Whilst liquidity is still an issue for some lenders generally we have found there are funds available for the right deals. In fact, there are now a number of lenders who are willing to consider transactions above £50m, which is a significant change from a few months ago, when only a handful were willing to commit to that level of liquidity.

"At the smaller end of the market it remains more competitive and whilst the emphasis is still on the quality of the borrower there appears more willingness to look creatively at deals.

"The demise of Bear Stearns has further dented confidence in the banking sector and LIBOR in the short term is likely to continue trading at a significant premium to Bank Base. However the gap between cost of funds (against SWAP rates) and average property yields remains as positive as we have seen in a number of years."

GDP was formed last year by former Nationwide colleagues Paul Wilcox and Darren Switzer, along with Gareth Rees, previously head of North West valuation at CB Richard Ellis.

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