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Category: Recent Finance Deals

new property developers

New Property Developers for Amazon Fulfillment Sites

Amazon, the retailing name on the tip of the tongue of any retail shopper, is on the hunt. The company is looking for fulfilment sites to cover the West Midlands and the North East of England.

Having made clear that they have chosen to work with new property developers rather than build their own sites, opportunity has opened up for developers countrywide. This matches the strategy employed when they appointed developers to build their site at Severnside.

With several multi-storey fulfilment centres, they are following the model they have in London. The two models that serve as an example are the London Distribution Park in Essex and Central Park in Bristol. This move reinforces the evidence that the distribution and logistics business continues to grow.

Amazon has clearly developed their business model to utilise the use of multi-storey buildings. In an interview with Property Week, an agent close to the planning revealed that their operations work well on multi-level developments.


New Property Developers See the Opportunity

London distribution parks multi-storey facility boasts several firsts. For starters, it is both the largest and tallest warehouse in the UK. An impressive 61 loading doors provide a streamlined incoming and outgoing logistics stream.

Amazon’s expansion has been notable as in 2016 they took 24% of all new distribution space in the UK. This accounted for about 100 000 sq feet of new space occupied in that year. Although growth was lower in 2017, plans indicate that the space for distribution will increase over the next twelve to twenty-four months.


Retailer Woes Influencing Warehousing and Logistics

While retailers are being forced to rethink their business models, slow change means that there is a real risk of empty warehouses. Retail failures mean that there will potentially be a glut of warehousing space. How serious this becomes will depend on how retailers adapt their business model to cope.

Good examples are the case of Bunnings that canned its 500 000 square foot requirement before it was sold last week. Additionally, Toys R Us and the woes of House of Fraser are indicators of what happens when change is not fast enough.


Asset Finance – Exploring the Diversity of Lenders

Every business experiences cash flow problems in its lifetime. For small and new businesses, it quite often happens early in their lifetime. Established businesses will occasionally experience problems with liquid cash.

This is not necessarily a reflection on the financial health of the business. Rather, it reflects the economy surrounding the business. There are multiple reasons why asset finance may be the best option. When there are healthy assets to secure a loan quickly this may be ideal.

There may be a merger, or a company may need to finalise an acquisition quickly. Asset finance may then be the best available option. Lenders are less likely to falter when a loan is secured on strong assets and asset finance can be made available quickly. Loans provided as asset finance also have lower interest rates because the risk of loss is substantially reduced. They offer a secured risk, whereas an unsecured loan will cost more.


Asset Finance and Borrowing Costs

The cost of issuing shares or bonds can be prohibitively expensive and take longer. Raising funds through the securities market is also difficult, especially if time is a core factor.

Additionally, asset finance is secured on assets that have not been secured elsewhere. If they have been, usually the other lender will have to agree to subordination. This is often not a quick option and therefore why secured asset finance is easier to obtain.


Finding Asset Finance Lenders

A simple Google search returns list upon list of lenders that may be willing to explore and offer asset-based finance for you. Rather than simply approach each lender individually, it is best to use a broker and financial specialist to do this for you. Brokers have special relationships with their regular providers and they are also likely to negotiate better terms and rates for you.

There may appear to be a sea of funding resources out there. Remember this. Every lender is different as is every borrower. Some lenders will only provide finance for businesses in certain sectors. Assets may seem ethereal to some lenders, especially when it comes to tech companies with software assets.


Different Types of Asset Finance

Asset finance can also involve seeking funding for specific assets. There are more lenders available for this type of asset finance. Companies may want to fund new vehicles, manufacturing equipment, or even increase their tech footprint. Lenders secure the loan against the asset. In some cases, they will provide a lease agreement for a set period of time and provide the lease for the company after they have funded the acquisition of the asset.

Renewable energy and aircraft are popular new acquisitions that can be funded against current assets. Healthcare equipment and the agricultural sector can access asset finance too. It all boils down to finding the right lender.

Brexit fears have not affected the UK’s internal asset finance industry in the way that some forecasters suggested. For most in the UK, it is business as usual. There will always be business to be done, thus there will always be asset related finance made available.

This type of finance cannot be secured for startups. Lenders want to see a stable trading history. There is a clear requirement of at least two years trading to be in place before any lending can be considered. Once a business has a stable history of trading and can show consistent goodwill, asset finance should not be out of their reach.

Belgravia Property offer borrowing advice in all areas of unconventional finance and will help your business find its best asset finance opportunities. With established relationships with lenders, Belgravia is in a position to negotiate good terms and conditions as well as interest rates for you. Contact us for more information.

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