The Bank was approached by a long standing broker partner with a proposal to fund the purchase and redevelopment of a run-down retail unit with some commercial and residential accommodation. The property had planning consent for conversion to 5 apartments with some commercial space retained to the front of the ground floor.
The clients run a number of successful businesses including an estate agency, letting business and property investment company, but are not outright ‘developers’. However, they have undertaken three similar projects in the past 5 years and built up a professional and reliable team of sub-contractors to undertake the work. The construction phase is scheduled to take 12 months at a cost of £600k and the resultant development of two studios, one 1 bed flat, two 2 bed flats and commercial space will produce a GDV of c£2.48m.
We have agreed to lend 43% of the initial purchase price together with 100% of the construction costs, professional fees and interest which results in an exit LTV of 53%.
The clients propose to refinance the completed units into their own property portfolio which they manage through their letting company.
Loan Amount: £1.26m