In recent years, the need for increased digitalisation in the real estate debt industry has been highlighted by entrepreneurs selling technology designed to modernise key business activities.
But the founders of a new business-to-business real estate debt platform argue the industry has so far lacked integrated software through which borrowers and lenders can not only source loans, but can also manage them, long-term.
Thomas Schneider, former chief investment officer of online property marketplace BrickVest, and Nicole Lux, senior real estate research fellow at The Business School, part of City, University of London, are launching FinLoop – a product they say has the potential to serve as the digital host of Europe’s real estate financing activities.
Schneider, who previously held roles at Lehman Brothers, KPMG and EY, co-founded BrickVest with former investment banker Emmanuel Lumineau in 2014. The platform provided retail investors with access to institutional-grade property investments. BrickVest subsequently launched a debt product through which loans could be originated and syndicated. However, four BrickVest subsidiaries were placed into administration in November 2019, the same month Schneider left the business. In February 2020, German real estate manager Patrizia bought the business out of administration.
Schneider has since turned his attention to a real estate debt-specific fintech product. As the firm’s chief executive, he aims to draw on his experience with institutional investors to grow the business.
Nicole Lux, who will continue in her role with The Business School, including managing its twice-yearly UK property market lending report, is FinLoop’s chief operating officer. She will focus on promoting the software to lenders.
Schneider argues FinLoop is different to any previous property finance platform. “There have been platforms that were either marketplaces only, or loan management tools only. They all aimed to serve one need. We are creating a solution that covers all aspects of the real estate finance business.”
He says FinLoop is a software solution for the industry, rather than just a platform designed to match lenders and borrowers. Although sponsors will be able to source and arrange finance through the platform, it will also streamline loan approval and closing processes; provide users with communication tools including video conferencing; as well as data-room technology and long-term data storage functions.
“Our goal is not just to be a lending platform. It is to provide a tech solution, in the same way businesses might use Outlook, but designed specifically for the real estate debt industry,” he adds.
Lux says the covid-19 crisis, which forced real estate finance organisations to do business remotely, convinced her of the industry’s need for an integrated platform through which all aspects of business can be conducted. “Lawyers, surveyors, valuers can all be invited into the platform. All documents are in one place to streamline deal closing and to store the data for regulatory purposes. Deal parties can revisit it in five years when they need to refinance.”
The platform, which has been in beta testing since October, has so far had transaction volumes of €200 million loaded onto it. The founders are now opening it more widely to investors and lenders.
Although FinLoop is designed to be more than an online marketplace, Lux says its communication and data storage features create potential for lenders and borrowers to source business. “Lenders can update their lending criteria each morning if they want to. Sponsors can also keep deals private if they only want to approach selected lenders.”
Lux adds that digitalisation is a priority for many of the lenders she surveys for The Business School reports. “The banks all have teams working on digitalisation. Five years ago, it wasn’t a priority for many. Now, it is a no-brainer because the crisis has underscored the need.”