Lending Query
A London based Office Asset Manager – involved in purchasing under-rented office buildings – approached Silver Oak Capital to assist with the purchase of a new building located in Farringdon, London. They required a long term commercial mortgage at 70% loan to value
Client Circumstances
The borrowers ran a successful business and had purchased a number of large office buildings in London in the past. They would find buildings that needed to be refurbished or were under-rented. There was a strong track record of successful acquisitions so this would give any lender a lot of comfort. The client wanted to complete the purchase in cash in order to act quickly enough but we would need to have the loan ready to drawdown as soon as possible after completion.
Problems to Solve
The main issues with this case involved the relatively high LTV (70%) requested from the borrowers. They also needed a long term facility (5-7 years) on an interest only basis which was challenging due to a number of the existing tenants having short leases. This issue was solved by incorporating a ‘cash trap’ mechanism into the loan agreement which allowed the bank to deposit a portion of the quarterly rents into an account which was used to cover any potential rental void periods.
Solution Provided
We presented a solution from a London-based bank which met the clients challenging circumstances. Details as follows:
£7.5 million GBP Loan
70% Loan to Value
3.85% + Bank Base Rate
5 year term
Full Interest Only
1.00% Bank Fee