The Three Year Mark and More – An Interview with CEO, Matt Watson

One of Tenn Capital’s most experienced and knowledgeable consultants, Dave Piesing, recently had the opportunity to interview our CEO, Matt Watson. With over 40 years of experience in the fiduciary services industry, Dave is the perfect person to conduct this interview as he has looked after an extensive range of structures for wealthy private clients worldwide.


Dave: Tenn usually takes prime or super-prime residential property as the asset class for its core security.  Does it ever deviate from that? Are there plans to widen that to other asset classes?

Matt: At our core, we are really a private client business. We work very, very closely with HNWIs and with that industry in general.  That means that we would like to find ourselves in a position with a vision to be able to offer debt secured on most types of assets in a private client portfolio, whether that’s residential real estate, financial assets such as equities, bonds, funds etc, all the way through to trophy assets.  But we will always be anchored in residential property as it’s a very big asset class.

I think that once we start to articulate that and really get the message out there more widely that we can lend against the types of international property which have previously been so difficult to finance, then we can deliver very strongly on that asset class as it’s a really big market.


Dave: There are lots of bridge lenders out there.  What is Tenn’s USP?  What really distinguishes Tenn from the rest of the herd in this sector?

Matt: That’s absolutely correct. There is market saturation in the UK bridge lending sector with some fantastic businesses. What sets Tenn apart without a doubt are 3 key factors. Firstly, we do international property. We keep saying this, but we’ve executed in 18 countries to date, all over the world.  Secondly, we do high value lending. The average loan size with us is around £6 million, so quite big ticket deals.  That’s the stuff that we really like. Thirdly, and this is a function of where we’ve come from, we are incredibly creative from a security package point of view which enables us to do things due to our deep understanding of working with the private client sector, trustees and corporate service providers. This enables us to find solutions which other bridge lenders probably can’t find, or to put together solutions that other lenders don’t know how to deliver. Those three factors combined are extremely powerful.


Dave: The international property market is clearly a real niche. You mentioned that deals have been done in 18 countries so far.  How many countries are likely to be added to that list? Do you have any specific new countries in mind?

Matt: We genuinely lend all around the world but I think that can really be broken down. It’s possible to reverse engineer the countries which form our target markets.  Outside of the UK the minimum loan size is £1 million or equivalent and our average loan to value across our lending book is 48%.  So let’s say that means that most of our property values are a minimum of £2 million.  If we find ourselves in a position where we or the borrower have to sell those assets, then we want a liquid property market at the £2 million-plus level, which is the bottom of the scale.  There’s a finite number of countries with prime residential property markets of that level, I guess globally perhaps 30-35 countries?  Those countries would fit our model and we’ve done about 50% of those already.

We’ve had interest in the Swiss market and although we’ve not yet done any Caribbean loans we are very interested there too. We’re not quite ready yet but if we were to open another office then I think Cayman would be near the top of the list. We are super interested in Cayman as a jurisdiction and with the gateway opportunities it offers particularly to the United States and the rest of the prime Caribbean market such as Barbados. We’d have no problem doing business in Australia as another example, as it’s a very healthy prime residential property market.  There’s also countries a lot closer to home which we know is still untapped. The market is huge in Europe, and nobody is really doing it at the moment.


Dave: Tenn is well known for lending within and around fiduciary structures, which opens up so much collateral within structures which UHNWIs don’t automatically think about using.  It appears that there is a real need to educate UHNWIs, their professional advisors and their offshore trust and corporate service providers about what’s actually achievable using assets within their structures. Do you agree?

Matt: Yes, and I think it has started to happen. It becomes apparent to those intermediaries when executing a transaction and we’ve now worked with 7 or 8 leading trust and corporate service providers. It has really opened their eyes as to what’s possible and it’s a wonderful market for us to work with.  But, for sure, we could do a lot more with firms who have got clients requiring some liquidity and who perhaps haven’t even thought of this as being an option.  That’s where there’s a big opportunity for us. If we can get the message out loud and clear that if you’ve got a high value international residential property that’s been used as a holiday home or investment property and fits the criteria needed to raise some liquidity then we can do that.  Not only can we do that, but we do it cheaper, faster and more efficiently than anyone else.


Dave: Interest rates for bridging are obviously a lot higher than mortgage rates and those have soared over the past 12-18 months.  How have those increased rates affected the demand for Tenn’s offering?

Matt: Firstly, demand for our offering is high and we’re growing well and growing quickly. Topline revenue growth was up over 300% last year and the loan book was over 200%. The pricing question I always think is an interesting one as I think it’s a Trojan Horse. I don’t think people think price is the main factor to tasking out bridging finance but I think it’s the wrong thing to focus on because if you’re taking out some finance in general, whether it’s for a house or a car, or whether it’s for something that Tenn does, you’re taking it to solve a problem, right? You might not want to pay cash for it because you want to make an investment. So you’d be using finance as a tool to achieve your aims and if your aims are otherwise not achievable, what is “too expensive”?  The price of something is what someone’s prepared to pay for it.

If we can do stuff that is hard and nobody else knows how to do it, and if we can do it in size, then there’s obviously a cost to that. It’s hard work. It requires some creativity and some intelligence to put it together. So yes, it’s not the cheapest finance you can get but finance in general is not super-cheap right now.  What is important is it’s solutions-driven, so we provide required solutions and there’s a cost to them.


Dave: People often think of bridge funding purely as a means to fund another property purchase, but releasing equity to fund other purposes is also very common. What sort of other funding purposes have you been seeing?

Matt: We generally don’t like using the term “bridge funding” because you’re right it’s become such a wide-ranging tool now. When people think about bridge financing they often think of how it was 30 years ago when it was for traditional bridging, but actually it’s a catch-all now for anything which is not buy-to-let or is not mortgage-related.  So we often use the term short-term finance which is used for any number of reasons.  We’ve seen it used for purchase of another property, for capital calls on PE funds, to make other investments, to settle liabilities, pay large legal bills, to settle a divorce.  So, whether it’s something that’s in your personal life, then you use it to do that.  We’ve used it for any number of reasons. It’s simply a wide-ranging tool to provide liquidity.


Dave: What about the funding model?  How big an advantage is it that Tenn doesn’t need to go back to Credit Committee to get funding released once a loan has already been approved?

Matt: It’s very significant. We have almost a kind of merchant banking model where we agree everything upfront, and we do very detailed work upfront before going straight into execution. We have a fantastic JV partner that we work with and which funds our business in large size. We’re very much institutionally backed in that sense.  We work with a number of high net worth and private funders as well to fund loans that don’t quite fit the institutional model so we have the best of both worlds.  But it’s absolutely a significant advantage that we can write that size of debt in full and complete quickly.


Dave: How and what can Tenn lend when private banks can’t? How big is that opportunity to exploit? 

Matt: Private banks in general are set up in the most part to be largely silo’d geographically. They’ll have fantastic clients, wonderful clients, who can have places all around the world but in terms of a lending strategy it’s very unlikely that a single private bank will have a global lending strategy.   Instead it’s much more likely that they’ll have open architecture and work with their clients to fund property purchases around the world. Of course there are some exceptions to that, but in general that’s a pretty good summary of how that sort of private banking lending model works. That’s because it’s pretty difficult to lend in multiple geographies, and we know that as a fact from our own experience. So our view is that if it’s difficult, then you need to rebase what you think your target market is and so most lenders lend on a targeted geographical basis.

By contrast our targets are not geographical but are instead client-focused so we lend to the clients that we like in the segment that we like and if we think that segment is very attractive for a number of  reasons. We’ll do that in many places around the world. It’s a change of focus to lending to the clients that we are interested in more than the geography.


Dave: One last question. What do you expect to see in 2024 and 2025 in terms of possible new product lines?

Matt: We will certainly be announcing more than one new additional funding line this year. I think it’s pretty certain that we will be doing more financial services industry-related lending, whether that’s securities lending, capital call lending or lending to funds structures. Those are focuses for us. But we’ll also be really focusing on delivering more to the types of clients that we’re working with right now as we already know that’s a huge market. We’re working more closely with trust and corporate service providers.

The next two years are “breakout” years for Tenn as we’ve now stopped being a start-up business and we are now really going through a bit of a scale-up phase, expanding the team into multiple jurisdictions.  I think people have got confidence in us as a business to deliver on some of these big ticket items that we see.  2023 obviously saw a rising interest rate environment which is tough from a lending perspective. I think most lenders, if they were telling the truth, will tell you that it was hard. We think 2024 and 2025 are going to be fantastic years and we’re incredibly excited about the opportunities.


Dave: Thank you so much Matt for your open and honest answers. I am really looking to collaborating with you again this year but also in the many years to come.