One of the many joys of being part of the dynamic and rapidly growing private funding space is the ability to be creative and solutions-driven.
Having the flexibility to provide structured solutions across all levels of the capital stack means that as a lender, it would be rare indeed for us to not be able to provide a solution. This becomes even more valuable when combined with a relationship philosophy that we feel really differentiates us.
Having a 30+ year corporate lending background, for me the essence of a good relationship is to deeply understand the wider borrowing group’s position. Only then can you provide solutions that truly cater for a client’s needs. Essentially, I try to provide ideas on how to solve the wider group challenge instead of just their current crisis.
We often see new clients come to us when they are in trouble – in rescission on a contract, their loan has matured, their development permit is about to expire because they can’t activate their site, etc. A relationship with a lender who has a group-wide perspective and a strong relationship built on honesty and openness, goes a long way to avoiding these calamities.
To build a strong relationship requires trust and transparency. As a borrower, you need to ensure that your desired outcome is clearly articulated and understood. As a lender, we’ll take the time to understand your vision, and work through different structures that can assist you in achieving that vision. Ultimately, we try to create a sense of partnership with our clients, where we can add value to their business over and above their immediate capital requirements. And in turn, we become the preferred capital partner for those clients, funding their ongoing pipeline of developments.
In the traditional property lending space, many lenders are transaction focused rather than relationship focused. They often cherry pick which assets they’ll fund, have very little understanding of the wider group structure, and are unlikely to add any value to the business’s strategic decisions. Little credence is placed on the wider position, needs, or risk faced by a sponsor and their business.
It is exciting at Payton to have a structured process designed to build a strategic relationship with our clients. To consultatively understand all of a group’s projects and to map out a group-wide cash flow together with the client is incredibly powerful. Importantly, we are not just focused on getting the deal, but more so on how we can create a long-term relationship with that client. And in this current world of uncertainty and fear, the feedback we regularly receive is that this is something of immense value to our clients.
As many of our clients will attest, the process of sharing a group-wide perspective can provide significant benefits, including:
- A second set of eyes over the group cash flow from an experienced lender. Where are the hot spots? What are settlements that are coming due?
- A critical eye looking for opportunities to help maximize IRR and ROE.
- A testing and re-testing of how effectively your capital is working for you. How much are you paying for equity? For debt?
- Flexibility that comes from forward planning. Would you like to roll your investors on this project on to the next one by paying them out early? How might you do this? What will be the cost-effectiveness of doing this?
- A sanity check that your future plans align with your facilities.
- The confidence to bid on that site, because you and your lender have looked at the big picture together and it makes sense.
- Peace of mind that timelines are agreed and typically well in advance of deadlines – less stress!
Of course, every good relationship starts with a good conversation. We’re always happy to discuss and review a potential new clients’ situation and funding needs. Our goal, of course, is that over time, that conversation develops into a long-term and mutually rewarding partnership. And that’s why I love working in the private lending space.
