United Trust Bank (UTB) Structured Property Finance was approached by a broker representing a client which was part way through a project to substantially remodel and refurbish a large office building with a GDV of £11 million.
The project had commenced well but was subsequently delayed due to labour and material shortages caused by the Covid pandemic, and this led to the site being mothballed for several months. Once work recommenced, the build was facing time and cost overruns and the borrowers deployed their cash reserves to keep the scheme moving forward. The original lender offered a facility extension, but the borrower’s broker decided to explore alternatives as the new terms were not competitive.
UTB’s SPF division worked closely with their construction team to appraise works completed to date and projected funding requirements to achieve practical completion. Bank panel surveyors also confirmed there would be a good level of occupational demand for the finished office space, part of which already had tenants in place. With the building fully weather tight and mainly internal electrical and plumbing works plus final fix to complete, UTB confirmed it would provide a £6.25m facility to settle the original finance, complete the remaining works and reimburse some of the additional funds the customer had committed to the project. The borrowers cross collateralised another commercial investment property in their portfolio and the terms offered by UTB presented a considerable cost saving over the offer from their original lender.
The customer will retain the office block within their real estate portfolio with a refinance of the UTB refurbishment loan on longer term investment finance terms once the project is complete.
|Borrower||‘Value add’ Investor-Developer|
|Loan Type||Commercial Refurbishment|
|Location||East of England|
|Loan Purpose||• Refinance and heavy refurb|
|Special Features||• Refinance prior to practical completion|
• Original project timeline impacted by labour, materials
& product shortages caused by Covid pandemic
• New facility delivers a significant cost saving against incumbent lender’s offer