United Trust Bank’s (UTB) Structured Property Finance team was approached to provide the funds required to complete the purchase of a 10,000 sq ft commercial space on the ground floor of a new mixed-use development in South London. The borrower had exchanged contracts off-plan in 2019, committing a deposit of £48,000 on the £867,000 purchase price and was required to complete by the end of November 2022.
The borrower was an experienced property investor specialising in value add commercial and residential opportunities. He began actively seeking a tenant as soon as contracts were exchanged and over the next 18 months identified, approached and secured a reputable tenant willing to commit to a 10-year occupational lease of the commercial space. By doing so, the borrower increased the market value of the unit to around £3m upon completion.
The client initially wished to borrow 95% of the total purchase price, SDLT and other costs with a mezzanine lender providing the remaining 5%. However, the mezzanine lender later withdrew their offer over a legal issue and UTB quickly restructured the deal to provide 100% of the funds required including fees and interest rolled up over three years to account for rent incentives.
|Borrower||‘Value add’ Investor-Trader|
|Loan Type||Commercial Investment Finance|
|Loan Purpose||• Acquisition of a commercial property with the benefit of a 10-year occupational lease|
|Special Features||• Facility agreed on market value rather than purchase price|
• Extended term to cover rent incentive period for tenants
• Fees and interest rolled up for the full term