Sectors > Top Reports > Together Memo 070219

Together Memo 070219

Substantial liquidity shortfall and impairments in risky bridge and complex Buy-To-Let lending - Short Bracken Midco 1 PIK-Toggle 8.875% 2023
PUBLISHED: 07 February 2019
PAGES: 328
PRODUCT CODE: JERRGB0001
SUBMARKET: Together, Top Reports, Top Reports,

£1,470.00

Why Read?

  • Understand how loan putbacks to Together from its securitisation conduits would rise to c. £700m if house prices decline 20%+, causing a liquidity problem
  • Understand how liquidity stress would be further exacerbated by cash trapping in Together’s securitisation conduits and lengthening behavioural maturities of securitised loans relative to the short-dated maturities of Together’s securitised notes
  • Understand why bridge loans and specialist/complex buy-to-let (BTL), both a substantially increased proportion of Together’s loan book over the past 5 years, are high risk

What’s New?

  • Deep dive on Together’s securitisation facilities and liquidity risks posed by these
  • Analysis of risks in bridge lending with case studies on failed bridge lenders
  • Analysis of risks in specialist/complex BTL lending and how bridge-to-let/term can be a way to hide “hung” bridges which cannot be repaid at maturity
  • Competitive landscape analysis for each of Together’s lending niches
  • Analysis of structural growth in UK specialist lending
  • Analysis of how and why UK specialist mortgage lenders have failed previously (early 1990s and post 2007) and how the current boom in specialist lending compares to these Waves 1 and 2

Questions Answered

  • Is Together’s loan to cost ratio closer to 100% on bridge loans?
  • Is bridge-to-term a way to hide hung bridges in the BTL segment?
  • Will Together really be profitable on a through-the-cycle basis given the increased prevalence of bridge loans and specialist/complex BTL in its loan mix?
  • Every prior generation of specialist mortgage lender has failed at the first downturn in housing. Is this time different?
  • How can Together reduce its liquidity risk?
  • How does Together compare with other competing or comparable specialist lenders and banks?
  • How should Together’s equity be valued and what is it worth?
  • What recovery rate should we expect on Together’s Senior Secured Notes and on the Bracken Midco 1 Plc Senior PIK-Toggle Notes?

0. View, Variant Perception & Recommendations


0. Group Structure & Capitalisation


1. Business


2. Securitisation Facilities


3. Accounting Specificities


4. Cash Flow


5. Banking Lens View


6. Bridge Lending Risks


7. Puzzle - Is Together Too Good To Be True?


8. Financial Projections & Valuation


9. Competitive Landscape


10. Structural Growth


11. M&A


12. Previous UK Specialist Lending Booms


Appendices

Together

Shawbrook

Aldermore

One Savings Bank

Charter Court Financial Services

Kensington

Paragon

Masthaven

United Trust Bank

Cambridge & Counties

Lendinvest

Vida

Optimum Credit

Pepper Money

Bluestone Mortgages

Magellan

Castle Trust

Foundation Home Loans

Fleet Mortgages

Hampshire Trust Bank

Axis Bank

Omni Capital

Nested

Tuita

Cheval

Octopus Property

West One

The Mortgage Corporation

National Home Loans

Mortgage Express

Household Mortgage Corporation BNP Mortgages

Bear Stearns Home Loans

The Mortgage Company

BM Solutions

HBOS

GMAC-RFC

GE Money

Platform Home Loans

Brittania Building Society

The Mortgage Works & UCB Home Loans Limited

Southern Pacific Mortgage Limited Salt

Preferred Mortgages

Amber Homeloans Limited Rooftop Mortgages

Accord Mortgages Limited Basinghall Finance

Igroup

Edeus

Beacon

Mortgages Plc

Victoria Mortgages

North Yorkshire Mortgages Limited Livingstone Mortgages Limited London Scottish Bank

Oakwood

Advantage Home Loans

DB Mortgages / DB UK

Freedom Funding

Unity Home Loans

Infinity Mortgages

The Money Store

Wave

London Mortgage Company

First National

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