Project monitoring: What we look for and why it is important
CapitalRise recently passed the £300m lending milestone, against £830m of prime property assets. To sustainably maintain this growth in our loan book, we have robust monitoring processes in place. Our own project managers work with independent third-party professionals, such as Kirsty Kimber from Colliers, who we caught up with on a recent site visit to discuss project monitoring in more detail.
Many CapitalRise loans provide finance for the construction or redevelopment of a property. On these loans, the borrower typically receives a portion of the loan at the beginning and then more is provided throughout the project. An independent Project Monitor Surveyor (PMS), appointed by CapitalRise, visits the development site to verify and report exactly what work has been completed and the associated costs. Only once this report has been received can the borrower request a construction finance drawdown to cover the costs incurred during that period.
During one of our recent site visits, we caught up with one of our PMS advisors, Kirsty Kimber, from Colliers to discuss all things project monitoring…
We joined Kirsty on site at Academy Gardens in Kensington, where CapitalRise has funded an £8.36m loan for the acquisition and refurbishment of a luxury apartment. The visit was to ensure the project continues to run smoothly, which she does, for example, by reviewing and certifying the works completed and confirming appropriate documentation is in place. Kirsty visits the site frequently alongside a CapitalRise portfolio manager. Sometimes, if agreed by all parties, they will visit every two or three weeks at critical stages.
Kirsty believes that, by having a greater understanding of the role of a PMS and the items that they report against, it can help lenders to make better-informed decisions and help manage the project risk.
Kirsty’s top-10 things she looks for on a site visit are:
- Progress on site against what was planned in the period
- Value of work completed
- Number of operatives on site
- Health and Safety general compliance
- Quality of work
- Confirmation of when Building Control visited
- Confirmation of when Building Warranty visited
- Variations against the planned works
- Compliance against the approved scheme
- The site is secure (particularly when lots of high-value materials are on site)
Kirsty adds that it is crucial to maintain a good relationship with borrowers. This is because if the relationship breaks down or becomes fractious, then it becomes difficult to obtain information on the project, which overall makes reporting on all elements of the development difficult.
The process of stringent loan monitoring provides certainty to investors, allows us to maintain close relations with the borrower and their project, and ensures that the development is performing as expected to the benefit of all parties.
She says she enjoys working with CapitalRise as the firm is a good funder and has clear communication lines. In particular, Academy Gardens is an excellent scheme; the borrower is very passionate and knows all the details of the project inside-out. The design and quality of the work are of a very high standard, and the property has many unique period architectural features.
As a specialist lender with a focus on prime residential real estate, the majority of CapitalRise’s loan book is in Prime Central London. But our loan book also includes Prime Outer London and Prime Home Counties addresses. By lending against some of the finest residential properties in the best postcodes, and working alongside experienced partners such as our PMS teams, we have been able to keep our door wide open to new opportunities and rapidly grow our loan book.