Structured Finance enables business park acquisition with minimal client cash

Structured Finance enables business park acquisition with minimal client cash

UTB’s Structured Finance team was approached by Paul Robins to assist with funding for the purchase of an industrial/commercial storage site in the South East. The large site also included a single residential dwelling but the purchase was structured with a deferred completion date for the residential asset.

The property comprised multiple commercial units held on short term leases/licences and whilst the Bank was unable to place much reliance on the strength of the individual covenants (the majority of occupiers were small businesses/sole traders) we were satisfied to proceed based on the number of units, the diversification across the portfolio and the underlying demand for units in the area.

The borrower did not have significant liquidity to contribute to the purchase, so we assisted by executing a 1st legal charge over a residential asset and a 2nd legal charge over another buy to let property.

UTB was able to offer the borrower a two-year facility (including interest roll-up for the first six months) in order to give the client time to asset manage the commercial site to upgrade the individual units, increase the overall rental income and increase the value.

Gerard Morgan Jackson, Head of Structured Finance at United Trust Bank, said:

“The Structured Finance team’s flexible approach enabled a new client to expand his business by acquiring a new commercial site. Not being tied to a product range, we were able to offer 100% funding across multiple properties on a two-year term with interest rolled up. Taking security over a range of assets, using first and second charges, allowed the client to use his capital for other projects rather than a deposit. The rolled-up interest also enabled the client to use the income from the assets to fund his ongoing costs as opposed to servicing the loan. These features, although fairly standard on individual facilities, are rarely used cumulatively on a bespoke basis to meet a client’s specific needs which makes this solution unique.

“Although our facilities are often designed on spec and differ from deal to deal, there are some things we do on every case. We always meet our clients face to face to gain a thorough understanding of their business and what they are looking to achieve not only in the short term, but in the long term as well. We view every proposal as a new relationship rather than a transaction and we tailor our facilities around our clients rather than trying to fit them into an ‘off the peg’ solution.”

Introducer, Paul Robins, said:

“Finding commercial funding for assets secured by short term leases can be extremely difficult these days. However, UTB’s Structured Finance team took a pro-active stance from day one and used their flexible and business minded approach to facilitate the loan.”

Borrower
  • Commercial Investor/developer
Amount
  • £3.4m – Acquisition loan and refinance
Loan Type
  • Structured Finance
Location
  • South East
LTV
  • 54%
Project type
  • Acquisition facility of a commercial/light industrial business park secured by the target property and residential assets
 Special Features ·         Commercial site comprising multiple tenancies/licences

·         Transaction structured using commercial and residential properties making the cash contribution to the purchase minimal.



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