Deal of the Month, March 2021: £1.8m Emergency Refinance to Avoid Repossession

The Impact of Covid on a Successful Developer

The client is an experienced property professional who, over the years, has grown a strong portfolio – a mixture of properties that he has acquired, as well as ones he has developed.

He got in touch with Tom Lee, Director at Pure Structured Finance, in February seeking the best way to raise quick finance as he found himself in an unfortunate position.

As has been the experience of many in the property world, Covid, the lockdowns and personal matters meant the loan he had in place on an asset needed to be urgently refinanced. His prior exit strategy was no longer viable within the timescales set pre-pandemic and he was now in default on his bridging finance.

Seeking a New Funding Partner

Seeking a solution for the client, so he could repay the existing debt and secure new funding, was not straightforward. Approaching funders with a lending requirement that included a £2m property currently under control of receivers is a tough start.

Due to increasing interest and the risk of repossession, speed was key, while also making sure there was a reasonable cost of funds for the refinance so that we weren’t just moving one issue to another.

Making a Complex Deal Attractive to the Right Parties

Within a day, Tom Lee had worked through all the elements of the deal and understood all of the important aspects, so he was able to start approaching the most suitable lenders.

He documented all of this in a bespoke funding proposal and one of the first calls he made to Mark at BiG Property Finance.

“I have worked with him and Lee on multiple transactions in the past have found their common sense approach, fast turn around and competitive pricing to be on point and this transaction needed all 3” commented Tom.

Within a further day, we had confirmation from BiG of them being able to accept the valuation on the project and agreed board sign off. The legal process was also started early due to the time requirement and the lenders lawyers, JMW, were sourced due to their track record and understanding of tight completion times.

Managing Issues Through to Completion

Unfortunately, the Covid complications continued and the impact on the property market meant that 2 of the properties used as security were down valued. As Tom says:

“I had to work to restructure the loan with the lender. We needed to allow the net loan to increase to the amount needed to redeem the current loan, while also assisting the client with the strategy needed to lower the redemption of the loan”.

Fortunately, just over 2 weeks after getting in touch with Tom, the new funding was in place and the previous loan had been settled.

Our client had already spoken to several brokers prior to engaging with us, but he quickly decided through initial conversions that he was in safe hands at PSF and decided to progress as soon as lending terms were presented.

He praised the attention and quick action performed by the PSF team, saying:

“Tom was extremely efficient, knowledgeable and kept in regular communication whether at all times through the week. He had a calming influence on me at a stressful time which was welcomed and will be turning to him for future investment requirements”.

Mark Bond, Operations Director at BiG Property Finance commented:

“Tom presented a very clear and accurate assessment of the lending opportunity which made it considerably easier for BIG Finance to understand his client’s complex requirements. This was essential to getting the quick approval needed. His continued involvement throughout the due diligence process greatly assisted the quick turnaround.”

Let Pure Structured Finance Help

If, like our client, your business has been affected by Covid-19 and the necessary lockdowns, please get in touch with our friendly and knowledgeable team to discuss your property funding options and how we can help improve your finances.