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.
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.
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