That’s how Craig Booth of Sirius Finance described this refinance proposal for a £37m redevelopment project in East London.
His client’s existing £19.2m development loan was due to expire and move to the lender’s punitive default rate.
In addition, the clients needed to borrow a further £1m to complete the development and allow £1.3m for interest, charges and other associated professional fees and disbursements. They needed a total facility of around £21.5m.
The borrowers were new customers to the Bank which meant that we had to work quickly to assemble a full picture of the proposal and the client’s requirements.
The project was the development of a large former warehouse in East London to provide 31 high quality apartments and over 25,000 sq ft of commercial office space. The developers had spent over two years and £250,000 of their own money working on the planning application for the substantial scheme and finally in 2015 the local council granted full detailed planning consent for the transformation of the original Victorian building and the demolition of the former warehouse to create a contemporary 6 storey building.
There are a variety of apartment styles available, from studio flats to 3-bedroomed penthouses priced from £500,000 to nearly £1.5m. The design and décor is particularly on trend for the area with exposed brickwork, exposed trunking, polished concrete and a high specification of kitchen and bathroom fittings. The project was close to practical completion and with the commercial space and freehold included, had a combined GDV of approximately £37m.
There were several exit options available and we explored each one in detail. The most likely would be through the sale of the majority of the apartments, nine of which had already exchanged contracts with purchasers and a further four were reserved. The company would also retain the most attractive penthouse apartments and the commercial space for investment and these would be refinanced using a suitable longer-term facility when appropriate.
Although many lenders are wary of refinancing partially completed projects, UTB looks at each case on its merits and members of the Structured Finance team made several visits to the site and met key members of the professional team. We saw for ourselves the high quality of the work carried out to date, and although there were still works required to complete the build, we were assured that the client could deliver the final product.
Most lenders will not consider part finished developments or residential schemes with units in excess of £1,000 per square foot. Fortunately for our clients we are not most lenders. We offered a new loan of £21.5m at a rate significantly below the existing facility.
At UTB we believe in supporting the right clients on the right schemes regardless of current headlines.