Lending Query
A regional property developer approached us to help fund the quick purchase of a block of 12 flats in south London. The block was fully let, with the owner falling ill and wanted to sell the property in quick order. He was willing to let it go at a discount if the funds could be made available. The market value of the block was £9 million and a loan was requested of £6 million to assist with the purchase.
Client Circumstances
The borrower represented a regional Build to Rent developer with a long track record. This opportunity represented a somewhat of an ‘off-piste’ project given the nature and therefore our clients did not wish to submit any of their own capital towards the purchase. The principle behind the firm had a sufficient asset base to support a 20% personal guarantee on the loan which was key in getting our funder interested in the deal.
Problems to Solve
Finding a bridging lender to finance 100% of the purchase price of a property (at under market value) is a challenging task in it’s own right. The loan size also posed a problem – it was a bit small for the larger funds but also a bit big for the traditional bridging lenders. We eventually approached a family office with a strong appetite for London residential deals who was happy to offer a solution on this asset. Considerable market research went into sourcing this loan for our client.
Solution Provided
We received the following terms from a London based Family Office:
100% of Purchase Price
£6 million
0.7% Per Month
12 Month Term
Interest Serviced
1.00% In / 1.00% Out
1.00% Broker Fee
20% Personal Guarantee