Complex £11m refinance saves developer considerable funding costs

Structured loans are usually bespoke financial solutions tailored for individuals or companies involving multiple securities often owned within several corporate entities or trusts. It’s also not unusual for these to be both on and off-shore and for the clients to be sophisticated, high net worth individuals with exacting standards.

In this example United Trust Bank’s (UTB’s) Structured Finance team was approached by a broker representing an existing UTB customer, an experienced property development company owned by a high net worth family. The company has a proven track record of delivering successful development projects and UTB had provided funding for several acquisitions since 2015. The most recent being a circa £1.7m loan to purchase a future development, a facility which was still live at the time of this application.

The family had invested profits from their businesses wisely and with them built a property portfolio comprising residential and commercial assets with a combined value of over £40m. The ownership structure was complex with properties divided between subsidiary companies and trusts based both on and off-shore. As existing customers of the Bank, the team already had a good understanding of the company’s structure and this proved to be vital in arranging a substantial facility in a short timescale.

The company was close to completing a 13 unit apartment development in an affluent area of London and works totalling £500,000 were required to finish the scheme. The project was running around 5 months behind schedule due to typical delays experienced in most projects. The delays to the completion of the build meant that the company was paying a considerable premium on its existing finance facility and would continue to do so until enough of the units had been sold to repay the loan. The proposal was for UTB to provide the £500,000 required to complete the development and a sales period loan of circa £11m to pay off the existing lender.

A facility of that size secured against the development alone would be in excess of the loan to value limits for the majority of lenders. An added complication was that the development was still in the process of being built, again another circumstance where the majority of lenders would say no. However, the team already had a good understanding of the portfolio and existing gearing and quickly structured a bespoke funding solution that could mitigate the increased risk associated with some of the factors in this situation. The team secured funding against two additional properties which were to be held only until the development achieved practical completion in addition to leveraging the clients existing facility already held with the Bank.

This was a complex loan for various reasons but despite the challenges, the strong existing relationship between the Structured Finance team, the customer and the broker, enabled the £11m facility to be progressed from initial contact to draw down in little over a month.

Loan details for example:

Term: 9 months
Loan: £11.2m

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