Delivering development loans: Portfolio manager Aaron Cummings on good development lending
One of our portfolio managers, Aaron Cummings, talks about growing in his role, delivering on development loans and what good portfolio management looks like.
When did you join LendInvest?
1st June 2017
Where were you before you joined LendInvest?
How has your role changed since joining?
I’ve been fortunate enough to work across several areas within the lending side of the business. I initially joined the Loan Servicing team. I also spent a year working within the Bridging Finance team before starting in an Associate role within the Development Finance team in February 2019. I’ve been in my current position as a Portfolio Manager within the Development Finance team for the past 18 months.
What are the key things your role involves?
My role involves working through the full lifecycle of our development loans. This includes working alongside the Relationship Manager, assisting with appraising and analysing new opportunities to prepare for credit review, undertaking initial due diligence, instructing professionals and reviewing their respective reports. This includes working through the legals up to completion of the transaction.
Once we have completed a new facility I am the point of contact throughout the term of the loan. This means monitoring the build process, executing monthly drawdowns, making facility amendments and delivering any day-to-day assistance our borrowers require.
How have you found reacting to the challenges of the past 12 months?
I think I can speak on behalf of most people and say that the past 12 months have been difficult, especially the first 3-4 months from March 2020; when we were put into the first lockdown.
It appeared that the world was falling over, which created a real challenge for the team and the wider business.
We focused heavily on our loan portfolio during this period, as we wanted to take care of our existing developers to work with them and provide the support they needed during this unprecedented challenging time.
This paired with the initial slow downs – and in some instances shut downs – of development sites across the UK. While it looked bleak then, we can look back at it now and be really proud of the way we all worked together from home to manage the situation effectively, and come out of the other side unscathed.
There are many parts of the business, from Funds Management and Treasury, Credit Risk, and our Development Finance team that work together in a normal environment, but the past 12 months have magnified this. We’ve all learnt on a more granular basis what each other’s roles entail, and on reflection, this has been a real positive to come out of an otherwise pretty dire year.
What improvements have you seen in how you’ve been able to achieve your role?
I think it’s the norm to improve in your role as time goes by and you gain more experience in your area of work. The past 10 months or so have seen times of working under prolonged periods of pressure, which you probably wouldn’t see outside of a global crisis.
There are only so many hours in a day and so many days in a week, so it’s really important to work with pragmatism and be as efficient as possible.
We’ve certainly adapted to this, and along the way we have frequently drilled down on improvements to our processes and procedures to make things as streamlined as possible.
It’s important to take stock and continuously look at ways in which we can improve our offering and service to our customers, and we’ve managed to get a lot out of this over the last 10-12 months.
What does good portfolio management look like?
The basis of good portfolio management in development finance firstly starts with building good relationships with your customers and understanding how they work, and then keeping that communication open throughout the build. Although developments can be similar, ultimately they are unique to themselves, so this detailed understanding and open line of communication is really important.
From an operational perspective you have to be proactive rather than reactive. A development finance loan is very active and hands on. For example, throughout the build process at times you may see delays in some cases, and at other times, our borrowers may see opportunities to enhance their scheme’s planning permission.
In these examples, as a portfolio manager you have to be ahead of the curve, and ensure that you are able to manage and restructure our positions to meet the needs of our customers and the commercial needs of the business in good time.