When a scheme needs £5m of development debt, or a portfolio needs a £20m refinance, the adviser you choose shapes the terms you are offered. The lender may even be the same one either way. What changes is the conversation: who has it, how the case is built, and who at the lender hears it.
I am often asked what separates a real estate debt capital adviser from a commercial finance broker. Commercial finance brokers do valuable work, and for many borrowers they are exactly the right call. But they are built for a different job. Here is where the two differ, and why it matters once your debt runs into seven or eight figures.
A different scale of deal
A real estate debt capital adviser works in the mid-market: debt of roughly £1m to £50m. Most finance arranged by commercial finance brokers sits below £500,000.
That difference in scale changes everything about the job. A £300,000 loan can often be placed through a standard product, a lender’s online portal and a well-worn process. A £12m development facility cannot. It needs:
- a funding structure built around the build programme, the drawdowns and the exit;
- negotiation of covenants, conditions precedent and monitoring arrangements;
- often more than one layer of capital, from senior debt through to mezzanine; and
- far more senior involvement from the lender.
Volume businesses are built on many smaller deals and broad, mass-market lender relationships. Mid-market advisory is built on fewer, larger transactions, each one structured individually.
Specialist, not generalist
A real estate debt capital adviser does one thing: property debt. A commercial finance broker typically covers business loans, invoice finance, supply chain finance and asset finance alongside property. That breadth suits a business owner who needs a little of everything. But it makes them generalists.
Property funding is full of nuance that only shows up when you work in it every day:
- how a lender’s valuer will approach a scheme’s gross development value, and what evidence supports it;
- the difference between loan-to-cost, loan-to-GDV and loan-to-value, and when each one is the real constraint;
- how planning conditions, Section 106 obligations and building safety rules affect drawdowns and value;
- why one lender is comfortable with a pub-to-flats conversion or a supported living lease and another is not; and
- how to stress a scheme for build overruns, sales delays and rate movements before a lender does it for you.
These details decide whether a deal is approved, and on what terms. A specialist sees them coming.
Where the work comes from
You can tell a lot about an adviser from who refers clients to them.
A real estate debt capital adviser’s introductions tend to come from global commercial real estate firms, architects and engineers, and larger specialist advisers such as corporate finance teams and insolvency practitioners. These are professionals who see complex situations and need someone who can handle them.
The client relationships last too. Debt capital advisers typically work with property developers and large portfolio investors over many years, across scheme after scheme and refinance after refinance. That continuity means the adviser understands the client’s business, their track record and their plans before the next deal even starts.
A commercial finance broker’s leads more often come from regulated mortgage brokers, local business networking groups, and smaller firms of accountants and solicitors. That is a perfectly good source of everyday business finance. It is a different market.
How the work gets done
Commercial finance brokers are typically set up for volume. Their systems are designed to move many cases through quickly: an enquiry form, a lender portal, and a handover to the lender’s processes. The relationship with the lender usually runs through its sales-based business development managers, and the credit paper is often prepared by a remote, junior underwriter who has never met the borrower.
That works well for straightforward lending. For a complex scheme, it means the person presenting your case to the lender’s credit team may know little about it.
A real estate debt capital adviser works the other way round. To succeed in this market, the adviser must be fluent in credit paper preparation and have a deep understanding of finance. In practice that means:
- Building the credit case ourselves: cash flows, sensitivity analysis, the borrower’s track record and a written credit paper that anticipates the credit committee’s questions.
- Structuring the debt, not just sourcing it: senior, stretch senior and mezzanine layered to suit the equity, the programme and the exit, rather than taking the first product that fits.
- Working directly with senior decision makers at the lender, so the decision is a considered one rather than a box-ticking exercise.
- Taking fewer mandates, so each one gets a principal’s attention from first call to drawdown.
This is bespoke work. It is closer to corporate finance than to product placement.
Same funder, different conversation
It is true that some of the funders we use will also be on a commercial finance broker’s panel. So why would the outcome differ?
Because the level of seniority each deals with at the funder is very different. A case submitted through a sales desk is assessed against the standard criteria for that product. A case presented directly to a head of credit or a member of the credit committee, with a properly built credit paper behind it, can be considered on its merits.
The same requirement can therefore produce very different answers:
- a decline on the standard product, or an approval on its own terms;
- a 60% loan-to-GDV offer, or a structured 70% offer with a clear route to it;
- conditions that stall the build, or conditions agreed in advance to fit the programme.
We have excellent relationships with the key decision makers at our funders. A good commercial finance broker may well have some of the same contacts. What differs is where the relationship comes from.
Ours is built on our credibility as Chartered Accountants, and on a track record of drafting our own credit papers. Most brokers leave that work to the lender’s underwriters. When we present a case, the credit team knows the numbers have already been tested, the risks have been addressed, and the exit has been thought through. That makes it quicker for them to say yes, and easier to have a frank conversation when a deal needs adjusting.
That trust is built over years, one well-prepared case at a time. It is what turns a “no” into “yes, if”.
What else a real estate debt capital adviser brings
A wider funding universe. Mid-market property debt comes from banks, debt funds, private credit, insurers and family offices, many of whom do not take introductions through broker panels.
The exit planned from day one. The best development facility is the one that refinances or repays cleanly.
We plan the term debt, the sales period or the refinance before the first drawdown.
Debt that suits the next deal too. Covenants, security and guarantees agreed today can restrict tomorrow’s acquisition. A long-term adviser structures with the whole portfolio in mind.
Accountability. Mandates are led by principals, not passed between departments. When a valuation comes in low, or a condition needs renegotiating, the person who built the case is the person who fixes it.
Honest advice, including “not yet”. Sometimes the right advice is to wait, add equity or change the scheme. An adviser who is not paid on volume can say so.
The two models side by side
- Typical debt size: £1m to £50m for a real estate debt capital adviser, mostly under £500,000 for a commercial finance broker.
- Focus: property debt only for the adviser; property plus business loans, invoice, supply chain and asset finance for the broker.
- Sources of work: global CRE firms, architects, corporate finance and insolvency advisers for the adviser; mortgage brokers, networking groups, smaller accountants and solicitors for the broker.
- Clients: developers and large portfolio investors, long-term, for the adviser; a wide range, often transactional, for the broker.
- Operating model: fewer, bespoke mandates for the adviser; volume-based systems for the broker.
- Credit paper: prepared in-house by the adviser; often prepared by a remote junior underwriter for the broker.
- Lender contact: senior credit and decision makers for the adviser; sales-based business development managers for the broker.
The right adviser for the right deal
For a straightforward business loan or a small property purchase, a good commercial finance broker may be all you need. But once your debt reaches seven or eight figures, the structure matters more than the rate. So does the way your case is presented, and who hears it.
