Securing Below Market Value bridging finance for £5m to help client grow their portfolio

What was the situation?

I was approached by an existing client looking to acquire 6 units in London, below market value at a large development site. The lender was looking to sell the remaining units quickly therefore my client needed my help to secure finance fast.

The finished units were beautiful; shiny, modern new-builds with views of the river Thames. The client wanted to borrow 75% LTV of the gross value, which was a £4.9m loan. This equated to circa 100% of purchase price as a gross loan.

The client was a highly experienced property developer and investor. They had shrewdly taken advantage of the market by sourcing multiple deals below market value, moving quickly to snap up the best opportunities. As a savvy business person, they had made their equity sweat by using flexible bridging finance for the acquisition, then sourced refinancing capital post completion to term finance.

What was the issue?

In exploring suitable options, we found the preferred lender who was keen to support the deal as they had previously had a successful deal with the same client. However, they had a limit of their maximum loan with one customer which meant we had to use another funder for the final unit.

In doing so, this created a potential security issue between the funders over the SPV which was being used to buy all 6 units.

What was the process?

In order to solve this issue, having a solid exit lined up – a combination of sale and refinance – gave the lenders comfort in supporting the deal.

By combining the lender who we have worked with for many years, and a new private investor who supports the additional unit, we were able to look at resolution.

We faced some challenges running two lenders alongside each other as 4 solicitors were instructed in the single deal including the clients and vendors solicitor, but fortunately all worked well together and communications were open at all times.

It was imperative that we remained involved throughout the progression of the deal to ensure we could co-ordinate the legals, never taking our foot of the pedal. By liaising with all parties outside of work hours and using our relationships with the lender to escalate the completion saw us work hard to finalise the deal successfully.

What was the solution?

The client successfully acquired the properties as desired, which has added to their vast portfolio.

We achieved less than 1% per month on 5 of the units at 75% ltv, and just over 1% per month on the sixth unit. Both of which are very competitive in today’s market. Needless to say, the client was delighted!