United Trust Bank’s (UTB) Structured Property Finance team was approached by a long-standing broker introducer to assist his client with the refinancing of an existing debt and release a small amount of equity.
The borrower is an SPV which was created to acquire a substantial Victorian building in 2021 and subsequently manage the asset. The property comprised office and commercial space but had the benefit of an existing planning consent for conversion to 26 apartments. However, following the acquisition, the company submitted a new proposal to create 9 new apartments and retain the majority of the commercial space which was occupied by several tenants generating rental income of over £1m per annum.
The broker had previously sourced the funding from another lender, however that lender subsequently insisted that the facility include a charge over the 9 apartments, something the borrower was keen to avoid.
UTB’s Structured Property Finance team was happy to offer a serviced £8.25m facility on a 36-month term secured on the commercial space alone. This represented an LTV of 55% with the commercial space valued at £15m.
There were several possible exits depending on whether the commercial tenants decided to vacate. The first break clause was due to mature in 2024 and if the tenants chose to leave, the borrower would most likely seek to convert the vacated commercial space into further apartments, in which case UTB would consider funding the building works and converting the debt to a new development loan.
|Borrower||Value-Add Investor / Developer|
|Loan Type||Investment Finance|
|Loan Purpose||• Refinance of existing acquisition loan and release of equity|
|Special Features||• Mixed use commercial and residential property|
• Facility is secured on commercial element only allowing customer to retain proceeds of sales of 9 newly developed apartments.