2x Commercial Mortgages – £2.3m of Funding


Client: Limited Company 

Executive Summary:

  • Client was a highly experienced property developer/investor located in the North West
  • The client overall portfolio consisted of 136 Residential Units and 11 Commercial Units, with a combined value of c£18m vs. v£9m of debt
  • All debt is on a fully amortising basis
  • Debt was spread with a mixture of Tier 1 and Tier 2 lenders
  • In 2018 the client had purchased an empty retail outlet on the ground floor with two floors of empty office space above consisting of over 30,000 square feet of space
  • Successfully achieved planning approval for 28 apartments (split between 1 and 2 bedroom units) and 3 commercial units on the ground floor. The smallest residential unit was c45 square meters
  • Due to the overall size of the project, client split the property into two separate freehold titles 
  • WRF successfully refinanced the 1st Stage where we manged to raise £1,098,500 
  • Due to the success of the 1st Phase WRF were invited to source long term funding for Phase 2
  • The 2nd  Phase was to create a large commercial unit (Dance Studio)  and 16 x 1 bedroom apartments on the upper two floors
  • As per the 1st Phase the client created 17 individual 125 leases, with the freehold being held by the ‘Groups’   holding company
  • The commercial unit was completed at the end of 2019, with a 5-year lease being in place generating an income of £30,000 which increased to £42,000 by the end of the 5th year
  • All 16 residential units were immediately let by way of standard AST agreements generating £124,800 in annual rent
  • Client estimated an indicative value of c£1.695m across all 16 units, with the commercial unit having a value of £400K

Client Requirement

  • Client wanted to borrow up to 75% of the indicative value of the residential properties and 70% in respect of the commercial
  • Client was looking to complete quickly to enable the client to purchase further property for conversation
  • The client wanted a fully amortising facility over the committed term

Background

  • The client made a direct approach to the Client Manager within the practice with whom he had undertaken 3 successful facilities whilst the Client Manager was working at Aldermore before joining Whiterose Finance as a Senior Client Manager

Client Manager’s Approach

  • The client manager made contact with Redwood who had funded Phase 1 of the project and understood the client operation as well as the quality of the accommodation
  • As with Phase 1, the Client Manager provided Redwood with a detailed synopsis of the proposal along with the client’s requirements 
  • The client manager received a very positive response from the funder with indicative terms, which split the commercial properties from the residential properties 
  • Due to the quality of the client and the overall proposal Redwood was happy to recommend a reduction in their standard interest rates across both residential and commercial

Events to Completion

  • Head of Credit approved the facility within a 48-hr period – bearing in mind the case also had to supported by the banks credit committee
  • Valuation date set for the Commercial Unit which was already let in Feb 2020
  • Valuation approved and legal work completed allowing the client to raise c£300k by the end of Feb 2020
  • Whilst COVID-19 had an impact on delaying the construction of the 16 residential units – however by the end of May all units ad been finished and fully let with tenants expected to move in 1st June
  • Valuer arranged a site visit w/c 25th May and completed his report by 2nd June
  • Report approved by the lender on 3rd June
  • All legal work had been completed between March and end of May therefore client was only waiting for valuation report
  • The loan facility of £1.186m was funded by on the 4th June

 

§  The two facilities detailed above generated c£17,811 in fee income received from Redwood Bank. Taking into account Phase 1 of the project total fee income currently generated from this client amounts to c£28,000 – time period 8-months

 

Email received form the client following completion: 

“Guys. What can I say – the service and commerciality to dealing with each and every one of you is exceptional.

 Thank you for pulling this out the bag once again!!!

 We have now secured 3 more acquisitions so here are to many more deals ahead