Demystifying Art Finance

Freya Stewart, The Group & Melanie Gerlis, Financial Times Borrower Rationales

Access to fast, valuable capital

Private Collectors Art Trade HNWI, Family Offices, Trusts Galleries, Dealers, Auction Houses, Art Advisors . Finance to support significant collecting ambitions . Working capital . Release of capital for other . Release of valuable capital from investment opportunities stock/inventory/bought-in lots . Entrepreneurs releasing capital from their collections for their businesses . “3 D’s” – Death, Divorce, Debt . Alternative to sale . Asset segregation Art Finance Process

. Title paperwork, . Storage facilities in London, Switzerland, information and New York, Hong Kong, Singapore, or import/export paperwork arrange museum exhibition paperwork KYC & AML Checks . Lender insurance or client insurance Credit-checking/Financial Statements

Art Collateral Logistics Art Collateral Commercial Terms & LOAN Paperwork & Due Borrower (Shipping/ Assessment Legal Documents Diligence Assessment Insurance/Storage) FUNDING

KYC & AML Checks

. High resolution images, full description and . Term Sheet initial provenance information . Loan and Security Agreements . Internal art specialists assess collateral suitability and collateral valuation

48 Hours 7 – 10 Days 1 – 2 Days 1 – 2 Days 5 – 10 Days 2 – 4 Days Commercial Terms and Financing Structures

Financing Structures Key Loan Terms . Term Loans Loan Size . USD 500,000 to USD 150 million . Consignment / Advance loans Loan To Value . 50% based on low auction estimates . Purchase financing Loan Maturity . 6 month to 3 year maturities . Credit facilities Interest . USD LIBOR + 6 - 8% p.a. . Third-party guarantee financing . Storage facility in London, New York, Switzerland, Hong Kong or Collateral Singapore Location . Museums . At maturity Loan Repayment . At sale . High quality art & jewellery with secondary market . Major auction categories – particularly Impressionist, Modern & Eligible Collateral Contemporary . , and photography – no antiques, wine or autos Other Due . No borrower financial/credit due diligence Diligence Multi-jurisdictional Art Loan

Geneva, Switzerland London, UK ~40% of the Borrower’s collateral is ~60% of the Borrower’s collateral is stored in a stored in a specialist storage facility in specialist storage facility in London, when not Geneva, when not otherwise on loan to otherwise on loan to museum museum Hong Kong Private collector Borrower resident in Hong Kong

Singapore New York, USA Collateral lent to National Collateral lent to The Gallery of Singapore Metropolitan Museum of Art

Sydney, Australia Collateral lent to Queensland | Gallery of Modern Art