UTB funds £24m office block conversion

United Trust Bank’s Development Finance team was approached by a developer seeking funding for the purchase of a sizable office building in South West London with consent for conversion to 55 apartments.

UTB had funded several of the developers’ previous schemes and the team were assured of their ability to complete this scale of conversion to a high standard and within budget. A loan of circa £4.6m for the purchase of the land and building representing 65% of market value was quickly agreed and drawn by the customer within a few weeks.

The developers believed the scheme for which planning had been approved was inappropriate for the location as they were mainly larger units. Having considered the local market and decided that smaller apartments would be more suitable and satisfy an existing demand, they consequently submitted a new scheme for 107 mainly one and two bedroom units and studio apartments. The new scheme received planning approval and the developers returned to UTB to discuss a facility to fund the conversion to completion.

UTB agreed with the developers’ change of plan and approved a new facility of £14.55m allowing the refinancing of the original loan and funding the full construction costs, professional fees, and interest of the new 107 home scheme.

Jonathan Nail, Property Development Director at United Trust Bank, commented:

“At UTB we’re always happy to support experienced developers who understand their market and can show they’re building the right homes in the right places. In this instance, the developer decided, rightly in our view, that the original scheme wasn’t the best use of this sizeable office building in this location and approached us to discuss their alternative proposal. We have gained significant experience of funding substantial conversion projects, a sector which has grown quickly following the changes to permitted development rights, and we were subsequently very pleased to provide the funding for 107 much needed new starter homes.”

Facility: circa £14.5m

LTV: 60% based on a GDV of circa £24m

Loan Term: 24 months LTV 58%