Director of Credit Alan MacLeod discusses Atelier’s approach to risk.

Atelier talks about providing ‘better property finance, by design’.  For us, this is more than just a tagline. It sums up how we approach running the business, and the way we relate to our network of developers, intermediaries and professional partners across the industry.

There are several ways ‘doing things better’ is designed into Atelier’s credit appetite and approach.

The turbulence within the development and property market over the last few years has highlighted the power of experience.  Our credit team is made up of expert real estate finance specialists.  As a collective, we have seen the property cycle turn and turn again, giving us the benefit of the long view within the development finance sector. This is of real value to our developer clients in challenging unconscious assumptions they might be making. A diversity of perspective and depth of experience means we can be confident we are lending responsibly and protecting borrowers from future pitfalls.

In style, we are collaborative, particularly in our working relationship with our Originations team. We review opportunities together at the point of enquiry, and we undertake credit assessments very early on in comparison to our peers.

For our developer clients there are multiple benefits: certainty, that if we issue terms, we will deliver; speed, in receiving a fast yes or no, and clarity around rationale, whatever the decision. We’re also proactive and work hard for our clients: that means we go the extra mile helping our borrowers structure their loans for success, and working with colleagues across the business, including our own in-house team of surveyors.

Clear criteria, consistent approach

We have a clear set of criteria that we use consistently to review our borrowers requirements, which includes:

Location: is it a suitable and liquid location for the proposed development?

Experience: does the developer have a solid track record, and crucially do they have experience in the region, and with the asset class in question?

Product: can we be sure that the product is right for the proposed location, and the local market? Is there confidence the completed asset can be sold (or rented) at the forecast pricing levels, and are there sales/rental comparables at that level?  This includes our assessment of the proposed exit route.

Recourse: are we clear on the skin in the game? Is there a Personal Guarantee or Corporate Guarantee, with an appropriate Assets & Liabilities statement to support this in place?

Construction: are we happy that the project’s proposed procurement route is robust and reliable, and are the build costs sensible?

For 2024, we are cautiously optimistic

There’s no denying that 2023 was a challenging year for the property industry, but for us, it was important we doubled down on commitments around giving our clients certainty, clarity and choice. Doing so meant we were able to come out of the year having continued to support developers in diverse asset classes including PBSA, and care homes as well as our more typical residential developments.  

Looking ahead to 2024, we’re cautiously optimistic. There are some positive indications for the property industry already emerging – inflation has reduced, the previous spike in build costs has flattened off, and we have also seen a reduction in mortgage rates.

In the context of increasing demand for variable rates, we believe we stand out from others in the marketplace in that we are happy to offer variable rates that are linked directly to the Bank of England base rate. Without our own standard-variable rate (SVR), we’re able to offer borrowers immediate transparency and simplicity.

Alongside, our clients tell us that it’s refreshing to work with a lender who sees the value in establishing long term partnerships and who wants to improve borrowers’ experiences around communication and responsiveness.

Our message for 2024 is this: we have a strong appetite to lend, and to work with professional residential developers who have scheme fundamentals in place.