Where does Mount Street sit in the real estate market?
At Mount Street, we manage real estate loan portfolios throughout Europe and we currently have over €25 billion of loans under management.
We also do a lot of non-performing loan (NPL) underwrites for various buyers across Europe, and have completed more than €18 billion of underwrites over the last two years. The direction of the market has moved away from commercial mortgage-backed securities (CMBS) in recent years and is focusing more on bilateral and syndicated loans.
Most of our current business is non-securitised such as loans from debt funds, banks and private equity shops.
Mount Street was established late 2012 by managing partners Paul Lloyd and Ravi Joseph. Both were ex-members of Morgan Stanley and were heavily involved with bringing CMBS across to Europe from the US.
What makes Mount Street different from its competitors?
We get a lot of repeat business from our clients. We have tried to build a reputation on giving that extra level of service—so in order to maintain that we hire people from diverse professional backgrounds, for example, from within investment banks and other financial institutions, in order to gain different areas of expertise.
We strive to be dynamic and flexible, and we make ourselves available 24 hours a day so we can deal with complex loan closings for our clients.
How has 2016 panned out for Mount Street?
Before the UK’s referendum on EU membership, the business was very quiet. Our clients were waiting to see what might happen. However, since the vote to leave the EU, we have seen a significant up-tick in deals being closed, particularly from debt funds, pension funds and insurance companies. These deals have generally been smaller than they were previously, more around £10 to £100 million compared to deals of over £100 million that we saw in 2015.
It is interesting that people tend to compare 2016 with 2015. This year has definitely been slower, but 2015 was a particularly good year so it’s not really a fair comparison.
Going forward, Mount Street is always looking to expand our reach, and we might consider branching out to the US next year.
What upcoming projects are you working on?
We have a stable business, so we are able to look towards other sectors such as technology, for example. We have invested heavily in technology, recently partnering up with a listed public limited company, Gresham Computing (see box-out).
The main driver for this partnership is that, having worked with several providers over the years, we have never found one that can provide a system that does everything we needed it to. Some might have 50 to 75 percent of the capabilities there, but we know there are still a lot of institutions using spreadsheets and manipulating data manually, for example, generating interest rates for borrowers, analysing rent rolls, and front and back loan management services.
We did a comprehensive review of the market last year and realised that there was nothing really out there that could provide everything we needed, and so we decided to invest and build one from scratch.
We have been working with Gresham for a while now and the system is coming on very well. It should bring significant efficiencies to our business, and we think it could also prove interesting for the big banks.
Many banks currently service their positions in-house, but the systems they use are often quite old so our development could potentially be appealing to them. The aim for us is to create new relationships and to scale up which could lead to exciting new projects in the future.