We were approached by one of our regular introducers with an unusual transaction.
His client, who is both an active contractor and developer, had negotiated with a church to redevelop the land currently occupied by their church hall. No money was to change hands for the site. Instead, the developer would build a new church hall and 6 flats above – the hall going to the church and the flats to be sold by the developer.
After looking closely at the figures we were not able to fully fund the construction based on the GDV of the flats alone. However, the borrower had some unencumbered property which he was willing to pledge as additional security instead of a cash contribution. We were therefore able to fund 100% of the construction costs and interest roll-up.
As might be imagined the documentation between church, developers and Bank was complex but we were able to deal with this ensuring that each party had adequate safeguards.