Capitalising on the Booming Aircraft Leasing Industry
The aircraft leasing industry is experiencing robust growth despite economic, geopolitical, and environmental uncertainties. This article highlights key trends in the industry, including private placements, lease rate factors, alternative lending solutions, investment-grade lessors, joint ventures, ICAV platforms, and aviation collateralized loan obligations (CLOs). These developments present opportunities for investors and players in the aviation sector to navigate challenges and maximise returns.
Amid difficulties accessing traditional ABS markets, airlines and lessors are turning to privately-placed deals. Although private debt investors may be costlier, this approach offers flexibility in terms and structures, faster turnaround times, and reduced execution risk. A recent example is the US$303.7 million MAST 2022-1 and MAST 2022-1 USA privately placed ABS, backed by Marathon Asset Management and serviced by Airborne Capital Limited.
Lease Rate Factors:
Discussions within the industry highlight the need for lease rate factors to rise with interest rates to attract investors back to the ABS market. Some lessors are witnessing upward movements in lease rates for new and used aircraft due to undersupply, rising interest rates, and certain lessors withdrawing from the market.
Alternative Lending Solutions:
Aviation-focused alternative lenders and credit funds, such as Ashland Place, Muzinich, Castlelake, and Volofin, are playing a significant role in commercial aviation lending. These lenders offer flexible financing options, catering to mid-tier lessors and airlines that struggle to access bank funding. Their nimbleness and regulatory flexibility make them competitive players in the market.
Investment Grade Lessors:
While traditional aviation lenders may have reduced appetite at the mid-tier lessor level, investment-grade lessors continue to attract significant financing. Recent examples include a US$1.7 billion syndicated facility to SMBC Aviation Capital and Air Lease Corporation’s successful public offering of senior unsecured medium-term notes.
Large private equity firms are establishing joint ventures with established and newly formed leasing and aircraft investment management companies. These platforms provide quick and flexible capital solutions, assembling portfolios of aviation assets across various sectors. Notable joint ventures include the Gilead Aviation platform serviced by Aercap and the ST Engineering/Temasek cargo conversion platform (Juniper).
Aviation investment platforms often use unregulated investment vehicles. However, the use of Irish Collective Investment Vehicles (ICAVs) as regulated fund structures is gaining popularity. ICAVs offer tax efficiency, regulatory compliance, investor protection, and a robust structure for aviation investments.
The participation of private equity in commercial aviation lending has led to increased interest in collateralised loan obligations (CLOs) for aviation loans. These aviation loan CLOs provide investors with diversification opportunities and enable private equity sponsors to raise funds or finance exits.
As stability returns to the market, increased funding availability offers prospects for growth in the aircraft leasing industry. Investors and industry players can capitalize on these trends to seize opportunities and achieve favorable returns.
We are currently raising funds for an aircraft leasing company. If you would like to know more please get in touch via phone or email. With an existing order book, returns are expected to be between 30-70% PA.
In the current economic climate, investors are looking for secure investment opportunities that can provide stable returns while mitigating risks. Property development and renewable energy are two sectors that offer potential for long-term growth, and combining them can provide an even greater opportunity for secure investments. In this blog, we will explore how property development and renewable energy can help investors find secure investments in the current climate.
Property development can provide investors with a secure investment by offering stable returns over the long term. As the population grows, the demand for housing increases, creating opportunities for property developers. By investing in property development projects, investors can benefit from steady rental income, capital appreciation, and tax advantages.
To mitigate risk, investors can focus on well-located properties with high rental demand, ensuring a steady flow of income. Additionally, investing in property development projects with a strong Gross Development Value (GDV) can help ensure profitability and reduce risks associated with underperforming projects.
Willow Rivers Wealth offers a range of property development investment opportunities in prime locations across the UK. Our projects have strong GDVs and are designed to deliver consistent rental income and capital appreciation. Learn more about our property development opportunities here.
Renewable energy is another sector that offers potential for long-term growth and secure investments. As the world transitions towards more sustainable sources of energy, the demand for renewable energy is increasing, creating opportunities for investors.
Investing in renewable energy projects can provide stable, long-term returns through the sale of electricity or energy credits. Additionally, renewable energy projects can benefit from tax credits and government incentives, reducing risks and increasing returns.
Willow Rivers Wealth also offers investment opportunities in renewable energy projects. Our portfolio includes solar, wind, and hydro energy projects, providing investors with a diverse range of renewable energy investment options. Learn more about our renewable energy opportunities here.
Combining Property Development and Renewable Energy
Combining property development and renewable energy can provide even greater opportunities for secure investments. Property developers can integrate renewable energy systems into their projects, reducing energy costs, and increasing the value of the properties.
Investors can benefit from the stable returns of property development projects, while also investing in renewable energy, creating a more diverse and secure investment portfolio. Additionally, property development projects with renewable energy systems can benefit from government incentives and tax credits, reducing risks and increasing returns.
Willow Rivers Wealth’s property development projects often incorporate renewable energy systems, providing investors with a unique opportunity to invest in both sectors. Learn more about our combined property development and renewable energy investment opportunities here.
Investing in property development and renewable energy can provide secure investments in the current economic climate. By investing in well-located properties with high rental demand and strong GDV, investors can benefit from steady rental income and capital appreciation. Additionally, investing in renewable energy projects can provide long-term, stable returns, reducing risks and increasing returns. Combining these two sectors can create even greater opportunities for secure investments while contributing to a more sustainable future.
At Willow Rivers Wealth, we specialise in property development and renewable energy investments. Contact us to learn more about our investment opportunities and how we can help you find secure investments in the current climate.
Which renewables are best for retail investors in the UK?
There are several renewable energy options that are well-suited for retail investors in the United Kingdom. Some of the most popular options include:
Solar energy: Investing in solar energy projects, such as rooftop solar panels, is a popular choice for retail investors in the UK. There are various investment options available, including buying shares in solar energy companies, investing in solar energy funds, or investing in community solar projects.
Wind energy: Wind energy is another popular option for retail investors in the UK. There are several ways to invest in wind energy, such as buying shares in wind energy companies, investing in wind energy funds, or investing in community wind projects.
Biomass energy: Biomass energy, which is generated from organic materials such as wood or agricultural waste, is also a viable option for retail investors in the UK. Investment options include buying shares in biomass energy companies, investing in biomass energy funds, or investing in community biomass projects.
Hydroelectric energy: Retail investors in the UK can also invest in hydroelectric energy by buying shares in hydroelectric companies, investing in hydroelectric funds, or investing in community hydroelectric projects.
It’s important to note that investing in renewable energy projects, like any investment, comes with risk and it’s important to do your own research and consult a financial advisor before making any investment decisions.
Additionally, it’s worth mentioning that the UK government has implemented a series of policies and initiatives to support the growth of renewable energy in the country, such as the Renewable Obligation Certificates (ROCs) and the feed-in tariff (FIT) schemes, which have helped to attract investment into the sector.
With the days shortening and the kids about to go back to school, we are preparing for the autumn rush as our investors go back to their desks. I hope you had a good summer and survived the travel chaos across most of Europe if you were traveling.
Here is a quick look at what to expect this autumn. We are taking expressions of interest now, so if any of the below are of interest please let us know and we will add you to the list.
1. Lydd, Romney Marsh, TN29 9BA – 5 Residential Units
This is a great opportunity to effectively be the bank. A first charge lending opportunity where by you will fund the purchase of the site and the developer will fund the construction of the 5 timber frame properties. You will hold a first charge over the site as security. We have done a number of developments with this builder in Kent and they come highly recommended. Full valuation report should be available in the next 2 weeks.
Equity Requirement of £600,000 to buy the land. The developer will be funding £800,0000 of build costs with his own funds. Term – 12 months. Rate – 12% p.a Security – First charge GDV – £1.8m
Equity requirement of £265,000 to facilitate the purchase and development of land in
Swaffield Road into 9 dwellings, consisting of 3 town houses and 6 apartments with landscaped communal amenity space. This is combined with a senior debt package of £4m. The proposed development makes in excess of 35% POC (gross of finance), which will enviably net back to around 28%, which in the current climate given how competitive the land market is, is a very strong return.
Equity Requirement of £265,000 Term – 12 months. Rate – 14% Security – Second charge
3. Conversion of Richmond Park Hotel into serviced apartments.
The Richmond Park Hotel is ideally located close to the River Thames in this most sought after area of West London. One or a small consortium of investors are invited to fund the equity a high value asset with a GDV of £5.6Million.
Reduce the number of rooms from 20 to 15 Full scale refurbishment and modernisation into higher yielding serviced apartments 15 year lease to serviced apartment provider already agreed at £235,000 p.a. Ground floor consent to change to café – min £30,000 income p.a. Rooftop mobile mast generates £14,000 income p.a. Total annual income £279,000 Development capitalised at 5% giving a £5.6Million GDV Exit via refinance to add to developers Portfolio (already interest from HNW investors to purchase as an alternative with an 8% yield).
Equity Requirement of £850K Developer will be funding £130K of this with their own funds. Term – 12 months. Rate – 14% Security – Second charge.
We will once again be partnering with GCR our preferred development partners in Cambridge. Since the last two projects we did with them, they have become one of, if not the largest developer in Cambridge.
We will be offering our clients another JV planning uplift opportunity in this remarkable, fast growing, tech city. We have been promised its launch any day now so get in touch if you would like to know more.
5. Aerospace industry, plane leasing opportunity
GLOBAL JET & WETLEASING EU (G/W) have successfully done more than € 60.000.000 of ACMI (Aircraft, Crew, Maintenance and Insurance) contracts in the last 10 years. Due to increasing demand in the travel sector post Covid-19 they are now looking to lease and operate their own aircraft in 2023.
They are currently seeing a 68% increase in bookings compared to the same period last year which is a 24% above the pre-covid booking levels. This has led to a lack of available aircrafts on the market. Several contracts and opportunities were lost over the last months even if the rates are +45% higher than 2019 levels.
Going forward they would like to be in a much better and secure position to satisfy the needs of their clients. Instead of using different ad-hoc operators to complete their flight requests, G/W is looking to lease their own aircraft and complete some of these highly profitable requests themselves. G/W intends to lease one aircraft in 2023, and if the demand and sales are as expected then they intend to lease another aircraft in 2024. To accomplish this G/W requires a total investment of $1.000.000 by Q1 2023. G/W will be putting in $250.000 of their own money. The money will be used to establish an AOC (airline operating certificate) as well as pay the 3 months security deposit on the aircraft. Furthermore, it will allow G/W to cover all start-up cost.
This is a highly profitable industry since the EU introduced its canceled flight compensation scheme. Airlines are now far more motivated to reschedule flights rather than have to pay out up to 600 Euros for missed flights. With an expected return of 20-30% per annum, this should appeal to sophisticated investors with experience in the airline industry.
We are working with two of the leading developers in the Hydrogen sector to build hydrogen production facilities across Europe. With as capex of £30,000,000 plus this wont be for everybody. However if any of our larger institutional investors would like to know more more please get in touch.
So thats a quick look at some of the exciting opportunities coming up over the next few month, if you are interested in any of these projects please click on the links or get in touch via email or call on the contacts below.
Also if you have any interesting projects you think might be suitable for Willow Rivers, please get in touch as we may be able to help fund them.
Enjoy the last days of the summer and I hope to hear from you soon.
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