Shinnecock Partners, a 28-year old family office boutique with significant expertise in alternative finance and fintech, has published “Creative Collateral: Lending Against Fine Art,” by the firm’s founding partner, Alan C. Snyder and co-authors/firm analysts Michael Cervino and Christian Williams. The 16-page report outlines a little-known niche investment opportunity, art-secured lending, which, as reported by Deloitte, is a $15 – $20 billion market that is growing at an annual rate of 13 percent.
“Mega-sized pensions and other large investment pools require ginormous markets,” said Snyder. “Art lending is a niche that won’t satisfy jumbo-sized appetites needing billion-dollar investments but offers a more rewarding opportunity for investors who are the mice among the elephants. This market is big enough to be interesting, yet small enough to be attractive.”
Similar to traditional asset-based lending, art-secured lending is a loan backed by fine art instead of more traditional forms of collateral (e.g., real estate, equipment, inventory, receivables, etc.). The appeal for an investor is substantial including potential yields of 8 percent to 12 percent, short loan duration between 12 and 24 months, capital protection from modest loan-to-value ratios of 40 percent to 60 percent, collateral security safeguarded by taking possession of artwork in a bonded warehouse, and little direct correlation to equities or other fixed income investments.
The research paper covers:
- An overview of the market and the “buzzword” lexicon
- Key factors to consider
- Risk mitigants
- An investor participation road map
You can access the report at: http://www.shinnecock.com/articles/alt_lending/art_finance.pdf
About Shinnecock Partners L.P.
Shinnecock Partners is a 28-year-old family office investment boutique founded by Alan Snyder, formerly CEO, Chairman and President of Answer Financial, President of First Executive, CEO of Executive Life and Executive Vice President of Dean Witter (now Morgan Stanley), and Harvard Business School Baker Scholar, with a unique approach: empower investors to make informed investment decisions. Investors are empowered to do it themselves (DIY) and/or participate with Shinnecock.