Bank moves quickly to back a 30 bungalow development
A broker approached United Trust Bank’s Development Finance team asking them to consider a proposal to assist an Essex landowner with a joint venture (JV) on a sizeable development project. The JV, with an experienced contractor, was to build 30 bungalows and refurbish a Grade 2 listed farmhouse in line with a recently approved planning permission. The landowner had already shortlisted a contractor and so, within a week, a meeting was arranged on site between representatives of UTB, and both JV parties.
Following the meeting, the team was happy to present the proposal to the Bank’s Credit Committee which subsequently approved a facility of circa £3m to cover 100% of the build costs, professional fees, a £100k road bond and interest capitalisation. The land was already held in the landowner’s company so the Bank was able to structure a facility to lend to joint borrowers, the contractor and the landowner, to avoid a costly transfer of the property into a new SPV.
Work commenced quickly and the build is progressing very well. Within 9 months of drawdown 22 of the bungalows had been reserved at prices in excess of the development appraisal, and the first 6 completions came through just four months later. The construction of the remaining 8 bungalows and the refurbishment of the farmhouse are ongoing but with a waiting list of interested parties.
Development Loan £3m.