We received a call from a London based property developer who had made an offer on a central London office building with a single tenant. This client had plans to purchase the building and hold the asset until the lease expired – only 2.5 years away. During that time he would apply for planning to add an additional floor and completely upgrade the building to a high spec. The ideal lender would also be willing and able to release the refurbishment finance for the project upon vacant possession. The purchase price of the asset was £21 million.
The borrower had many years of experience in the London commercial property market and was able to show a strong track record of similar such schemes. He had strong existing lender relationships and only approached us under the assumption that we could find a lender who would finance the purchase at 65% loan to value or higher.
Problems to Solve
This developer needed a mortgage in excess of 65% loan to value. The challenge for us was to find a lender with the appetite to assist with a property of this size. The market for office assets post-covid has been tricky to navigate and many lenders are reducing their exposure to these properties. We approached a London-based specialist debt fund who were quite bullish on the value-add office sector.
The following solution was presented subject to the developer making all the remaining rental income available to the lender to service the loan.
68% Loan to Value
3 year term