Deal of the Month: £5.9m Development Loan for 14 Residential Properties

With a loan rate of 6.47% and a LTGDV of 67%, the most recent deal of the month from Pure Structured Finance involved securing a 23 month £5.9m loan for a development of 14 residential houses in the North West of England.

About the deal

The client approached PSF as they had several projects that required funding. One of which was a site with outline planning for 14 units they were looking to exchange on. This would then enable them a period of time to put their own stamp on unit design and gain full planning ready to start works constructing the properties with the end GDV of £8.8m.

 

Residual Value Increase

While not a strange occurrence in development there would be a natural increase in the residual value of the site with full planning and with the client’s experience being a surveyor as well as a development the site was bought well. This meant that as well as sweat equity the cash required as deposit linked to the construction loan was only £375,000.

 

Reassurance From Experience

Although this was a big step up in terms of the size of scheme, the developer had completed prior projects and with his experience in the industry the bank took comfort from that, knowing he was more than capable to manage this build. However, this was put to the test even prior to the loan completing.

 

Overcoming Hurdles

With the pandemic and Brexit causing supply and labour problems, the prior contractors cost of work had increased meaning even though the GDV had increased total loan requirement was 67% LTGDV. The Loan was restructured to feature Mezzanine debt linked to the senior bank to cover the shortfall which meant the client didn’t need to double his deposit.

 

Client Review

“Truly a 5 star experience. We have used PSF for a number of loan applications that have all been successful. Tom and his team have supported us through all the applications with good advice based on their sound experience with a large pot of lenders. The process has been much easier than I have experienced before and they have been able to arrange large and small loans and construction finance for a number of schemes we are involved in. We would highly recommend this organisation and we will be using them again.”

 

 

Article By Tom Lee

February 15th, 2022

Tom is one of the founding members of the company and has been a part of the Pure Group since 2013 playing an integral part of the business’s growth and direction.

He had over 10 years of experience in the real estate financial sector prior to joining Pure with a major bank. Tom has a wealth of experience providing debt advisory on large, complex deal structures for developers and investors across all asset classes, throughout the UK and parts of Europe.

He has built a strong network across the property and finance sector, which enables him to provide a total package solution to his clients and contacts, with whom he has built long standing relationships.

See more articles by Tom

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