Development Loan for Student Conversion Cardiff

Lending Query

The team at Silver Oak Capital calls London home but we finance projects of all types up and down the UK. This particular enquiry involved the need for a development loan to convert a vacant office block in the centre of Cardiff into a profitable student accommodation block. The sponsors had already obtained full planning permission and needed senior debt to help with the purchase and construction finance. Purchase price of £700,000 with development costs of £500,000 and a GDV of £1.8 million.

Client Circumstances

The borrowers were UK nationals and relatively inexperienced in owning these types of commercial assets. They had also never undertaken a conversion project of this size before which added to the complexity. They had hired a strong team of architects, commercial agents and builders to assist them with this project.

Problems to Solve

The inexperience of the borrowers was a major point to overcome. Many lenders would not be comfortable providing development finance on a scheme like this to someone without a suitable track record. The scheme was also classified as ‘fully spec’ – meaning that the clients did not have a tenant lined up to take on the building upon completion.

Solution Provided

We managed to track down a specialist PBSA lender who were comfortable with the professional team assembled and provided the following senior debt offer:

70% Loan toGDV
85% Loan to Cost
8.50% + Base Rate
18 Month Terms (12 month build period)
Interest and Fees Rolled Up