Knowledge of customer enables UTB to offer senior debt, mezzanine and bridging package for pub redevelopment
An existing customer, who is well advanced on a development of 5 houses in Essex, asked us to fund their next site. The new project is an ex-public house in Kent close to the high speed rail link. Planning consent exists to demolish the pub and build 11 houses with a GDV of £1.55m. Given our experience of the customer we were willing to provide a senior debt facility at 55% GDV. However this left the customer £120k short of the funds required. Therefore with some reliance on the existing 5 property development we also agreed to advance this amount on mezzanine terms.
A further complication arose due to the property being commercial and hence liable for VAT. Some £80k of VAT will be due on completion of the purchase though this will be reclaimed by the developer later. We have therefore agreed to provide a bridging loan to finance the £80k VAT liability. Total facilities offered were £1.1m representing 71% of GDV though this will drop to 66% once the VAT bridge is repaid.