Lockdown Case Studies
Lockdown Case Studies Scottish Development Company Recently completed on a loan worth a total of £584,500, gross income £8767.50 – this included a 1% broker fee. The applicants are experienced property developers who have developed the former Panmure Hotel in Monifieth in Scotland into 9 luxury apartments https://thorntons-property.co.uk/Panmure-Apartments-Tay-Street-Monifieth-New-Build Due to the slower property market during the pandemic, the clients decided to let two of the flats and finance them in order to repay JV investors. As part of the deal they also financed a property that they were taking in exchange on a different development. The purchasers were doing a straight swap with their current residential so the clients purchased their residential property on a BTL basis, thus adding that property into their portfolio. The following difficulties were overcome by excellent client management by the AR and coordinated working with the BDM at Paragon: Properties are in Scotland with a limited lender market Security was held in a development company – this was surpassed by setting up a new SPV with the development company as 100% shareholder The clients had no BTL experience – they had requested more properties initially but compromised on the maximum available by Paragon LTV was restricted at underwriting to 70% due to the in-experience The case was presented to us April and completed 11th August, however the actual application with Paragon wasn’t submitted until 3rd June, so was only actually a 10 week process including some complicated legals. We are hopeful that we will now be able to place additional properties from a different development for the clients with Paragon moving forward. Buy to Let Purchase Client purchased a 3 bed flat in Watford for £325,000, this included a share of the freehold. As a high rate tax payer, the client decided to purchase his first BTL in a limited company. As a prime case, following a full fact find with the client, the case was submitted to The Mortgage Works on 2.84% fixed for two years. The application was submitted on 10th June and completed 18th August in the middle of a pandemic. Gross total fee income £1689.37.
Brokerplan will be at the WORKING FROM HOME Virtual Show!
Brokerplan will be at the WORKING FROM HOME Virtual Show! The Brokerplan business development team will be in attendance at the upcoming Working From Home Show. The show will be held virtually and will run on Thursday 30th & Friday 31st July 2020. 2 DAYS | 25 SPEAKERS | 3 KEYNOTES | 4 STAGES | 50 EXHIBITORS What can I do at the Virtual Working From Home Event?You will be able to move between exhibitor booths, and hear from keynote speakers. Watch Seminars & Masterclasses Live Chat Functionality Request callbacks and set-up meetings with valuable suppliers Watch videos from key suppliers and see their products and services in action Download brochures, guides and information from individual exhibitors The event is for professionals and businesses building the future of home working, you can register to attend this virtual event for free here
2x Commercial Mortgages – £2.3m of Funding
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”
£200k Business Loan Case Study
£200k Business Loan Case Study Requirement: Business Loan A long and well firm of Quantity Surveyors based in Renfrewshire specialising in construction dispute and contract consultancy The 3 directors completed a Management Buy Out in November 2018 which saw the original owner exist the business Projects undertaken have been throughout the UK, and as far as Spain Portugal France Germany Croatia and more recently Malta The contract in Malta will cover a period of 2-years with options to extend for a further 3-years Rather than putting it’s staff up in Hotels whilst working on the contract the directors wanted to purchase a company house – as part of the contract all accommodation expenses are to be covered by the client, therefore the company will be charging its client the hotel rate which they would have charged the client for a nights/weeks accommodation in a Hotel The clients were happy to provide a 33% deposit towards the proposed purchase Business had a strong balance sheet and was profitable with serviceability easily being proven from the last 3-years accounts The business had significant cash balances and could have used these in-order to purchase a property without the need to borrow. However, the directors did not wish to tie all their surplus cash on the purchase – hence the need for a Business Loan Whilst the business was financially strong, it had little in the way of tangible assets it could use as security for the proposed facility Therefore, the client was looking for an unsecured facility repayable over a period of between 5-10 years Given the strength of the business and its financial performance a repayment term of 5-years could easily be met with the estimated serviceability being met by 10x against the Adjusted EBITDA (Earnings Before Interest Tax and Depreciation) Approaches were made to the traditional Tier 1 banks, but neither wanted to help on an unsecured basis (other than a Debenture and unsupported director guarantee) We then made approach to Funding Circle and ESME. A formal offer was received at an Interest rate of 0.42% per month equating to an annual rate of 5.04% For strong credit worthy business going to alternative finance providers does not mean the client will be charged a higher interest rate as the above proves The Above Case earned a Gross Fee Income of £6,000 Please Note this case was completed during the current COVID-19 crisis showing lending is still being achieved.
Two Recent Partner Deals
Two Recent Partner Deals Bridge-to-Term Facility Completion this week: A developer who had arranged the original finance through our partner wanted to refinance from the bridge onto a BTL term loan. The deal was for three linked properties, with a total loan of £810,000. With proc fee from our partners Shawbrook and a generous FSA fee, there was a total of £22,092 fee income. Buy-to-Let Refinance This month we have also refinanced a BTL property through our regulated route with Virgin Money. With three applicants and the property being adjacent to the family home, the lender was able to get comfortable that the tenants were not related and agreed to lend £239,000. The total fee income for this case was £1570.50 and was the AR’s first case over the line. More About Brokerplan Brokerplan is a compelling opportunity for anyone looking to generate a significant income from becoming a Commercial Finance Broker. Established in 2004, bringing years of experience in the industry, we provide all the tools you need to succeed in the industry. Our expert support and wide range of Finance Broker packages mean that there is an option for everyone. More About Us
Partner Completes on £1.5M Essex Development Project
Partner Completes on £1.5M Essex Development Project Loan to Purchase Part-Build Project – Deal Summary One of Brokerplan’s network partners has recently completed on a £1.5M loan with Octane Capital! The clients approached our network partner looking to purchase a half-build project in Essex, which had sat untouched for four years after being abandoned by the previous developer. The clients were looking to take out a facility that would assist them in purchasing the development site, complete the refurbishment works of the existing property and also with the building of 10 flats and 4 houses on the grounds of the property. The Brokerplan partner worked closely with the team at Octane and managed to get this case from application to drawdown in just 20 days, receiving £33K in commission from the Procuration and Broker fee on the case. For more information on how you can become a commercial finance broker and earn commissions on property and asset finance deals call 0333 405 6666 or email info@brokerplan.co.uk for more information
Brokerplan – A Multi-Award-Winning Business Opportunity
Brokerplan – A Multi-Award-Winning Business Opportunity Although we aren’t in business to try and achieve awards it appears that our efforts to grow the business and to support the ever growing community which is our network is being noticed within the business community. Brokerplan has achieved further recognition, after being awarded SME News’ ‘Best Commercial Finance Broker Training Specialists’ and Global 100’s ‘Best Commercial Finance Network’. With 2019 coming to a close, these awards are a credit to the hard work and dedication we continue to commit to our partners. This is in addition to our 2018 award from CV magazine, commending Brokerplan’s high standard of support and training. Awards CV Magazine – Best Commercial Finance Network – Franchise Awards 2018 SME News – Best Commercial Finance Broker Training Specialists – Finance Awards 2019 Global 100 – Best Commercial Finance Network – 2019 Awards
Case Study – Stoke on Trent BTL
Case Study – Stoke on Trent BTL Our AR was approached by a client who owned two unencumbered BTL properties of low value in the same street in Stoke on Trent, for a refinance to release some funds for a forward purchase. He believed each property was valued in the high £40ks. Our regulated team were unable to place the application due to the low values. As the client was looking to refinance both properties at the same time, and having previously completed on a similar case, we approached our lending partner Shawbrook who have some discretion on their minimum value of £50,000 when there is more than one security. Once the client had agreed to proceed with Shawbrook, we started the application on 4th October, requesting a £75,000 loan against a total value of £100,000. Shawbrook advised that they were able to use the Automatic Valuation Model (AMV) and agreed a maximum loan of £71,900. As the client wasn’t entirely sure of the valuations, he was happy to proceed on this basis and also avoided valuation fees and delays waiting for the valuation to take place. The indicative mortgage offer was issued on 10th October and all requested documentation provided by the client immediately. This made the process quick and helped the case immensely and as a result was offered on 22nd October. As he already owned the properties, Shawbrook advised that the client could go ‘Non-Represented’ on the legal side, so the legals would be actioned by Shawbrook’s solicitors only, thus again saving both time and money. From there, the lender moved swiftly and the case completed on 6th November, with both the client and the AR very happy with the service provided. Total fee income of £1902.74.
Case Study – Semi-Commercial Capital Raise
Case Study – Semi-Commercial Capital Raise Executive Summary: Client: Limited Company 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 The 1st Phase was to create two commercial units (Restaurant and Tanning shop) as well as developing 12 x 1 bedroom apartments on the upper two floors During the initial development stage of Phase 1, the client created 14 individual 125 leases, with the freehold being held by the ‘Groups’ holding company The commercial units were completed at the start of 2019, with 2 x new 5-year leases being agreed The two commercial units are generating £33,700 in annual rent The residential units were given final Building Control approval on 5th September 2019 All 12 residential units were immediately let by way of standard AST agreements generating £90,120 in annual rent Client estimated an indicative value of c£1.65m across all 14 units Client Requirement Client wanted to borrow up to 75% of the indicative value of the said property Client was looking for a committed term of up to 25-years The client wanted a fully amortising facility over the committed term, ideally with an initial 5-year fixed rate However the client No1 requirement was for the facility to be drawn no later than Friday 4th October, as the funds were required to purchase an iconic commercial property in the same town centre, which the client had committed to purchase no later than 4th October 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 joint Whiterose Finance as a Senior Client Manager The client manager arranged a site meeting with the client on 5th September, the same day the subject asset obtained its final building control approval notification from the Local Building Control Officer Client Manager’s Approach The client manager made contact with 3 potential funders and provided he funders with detailed terms of the client’s requirements, together with comprehensive details of the clients existing portfolio and borrowing One lender wanted to restrict the term of the facility to 20-years due to the, commercial and residential elements of the asset being pledged as security One lender would be happy to consider 75% Loan to Value and were happy to consider an initial 5-year fixed rate – however they were not prepared to commit to the client’s requirement in terms of completion The client manager also approached Mark Dolphin our Business Development Manager from Redwood bank who on his recent visit to the practice advised of the willingness of the bank to look at the interest rate for top quality proposals – which this case clearly was I provided Mark, with a detailed synopsis of the proposal along with the client’s requirements in terms of completion on 10th September 2019 I received a very positive response from Mark with indicative terms, which split the commercial properties from the residential properties Due to the quality of the client and the overall proposal Mark was happy to recommend a reduction in Redwoods standard interest rates by c1% The client manager provided the indicative terms to the client, which although was not exactly what the client wanted: lack of an available fixed rate, maximum Loan to Value of 70% was accepted on the basis the lender committed that they could complete the transaction within the clients timeframe Events to Completion Upon receiving a positive response from the client 11th September, the BDM prepared and submitted a detailed credit appraisal by the CoB on 12 September having already obtained the buy-in from Head Office in relation to the timescale Head of Credit approved the facility by close of business 13th September, but due the size of the facility the request also required the approval from 3 board members Received confirmation a sufficient number of board members had approved the facility by lunchtime on Saturday 14th September Client Manager advised the client by text and advised that arrangements re valuation and legal will be done on Monday, along with the credit backed facility letter By 17th September, the client had decided on the surveyor re valuation from the two who were prepared to undertake the request and report back within 5 days of site visit and also requested Redwood appoint Freeth’s as there solicitor Valuation date set for the following Tuesday 24th September, with the report being available by Monday 30th September By the time the surveyor was due visit the property, he was in receipt of the Certificates of Title of all 14 properties from the lender’s solicitor Our BDM also arranged for his colleague to undertake a site visit on 24th September Meeting arranged with the BDM and the client for the Wednesday 26th September Valuation report received Monday 30th September Valuation slightly lower than anticipated by c£20k, potentially reducing the client overall debt quantum by c£14k BDM suggested that the arrangement fee (2%) is added to the residential element of the facility rather than being deducted The commercial element of the proposal also exceeded the lenders maximum 70% LTV by 0.5% – the BDM suggested the facility remain unchanged as within 12-months the LTV would be back within 70% LTV Request approved by the Head of Credit
Case Study – Commercial Portfolio Refinance
Case Study – Commercial Portfolio Refinance Executive Summary: Clients: Husband & Wife operating as a Partnership Clients were experienced commercial and semi-commercial landlords with over 30+ years experience Clients owned 8 individual units with an approximate vale of c£1.9m, generating an annual rental income of £188,000+ per annum The clients had existing borrowing of c£536k Clients were looking to re-finance the portfolio to c£850k c45% LTV, which would allow the clients to undertake significant portfolio improvements and to leave surplus cash for annual repairs and maintenance, which would ensure the portfolio, remained in excellent order The portfolio enjoyed 100% occupancy, although a majority of the commercial leases were less than 3-years before expiry The clients had lending facilities with Danske Bank and Bank of Ireland both of whom declined the clients request to increase the level of borrowing Issues Clients ages with Mr ages 70 and Mrs aged 66 All of the properties were located in Ballymoney Northern Ireland Mr & Mrs both were directors of a number of limited companies which had entered into Liquidation, following a CVL Approach Discussed the proposal with both Atom Bank and Assetz Capital as both have a strong appetite for commercial property located in Northern Ireland Both lenders wanted details of the client’s succession plans and whether they were involved in the portfolio on a regular basis Both lenders were advised of the clients directorship of failed companies and were provided with full details surrounding the circumstances around the companies failure Atom Bank unfortunately could not get fully comfortable, however Assetz Capital were happy to move forward with the proposal at an expected LTV of c45%, albeit the interest rate was significantly higher Clients decided to go with the Assetz ‘Agreement in Principle’ which was expected to generate c£300k in additional ‘cash’ Facility was part amortising with a 15-year profile and a 5-year commitment Upfront costs The valuation cost of the portfolio was in excess of £8,000, paid prior to any formal offer Upon receipt of the reports and valuations, the actual Loan to Value increased to 51%, which increased the borrowing rate by 0.25% to the client as the Loan to Value had exceeded 50% Client accepted the valuations and agreed to move forward with the next stage – legal This required the client to pay his solicitor a cost undertaking of £6k (to cover Assetz Capital legal fees) + the clients own upfront legal fees, resulting in a further upfront commitment of £10k At this stage the client had committed a total of £18k in fees Issues Faced during Legal Process Many times during the legal process the client was considering withdrawing, and it was only the strength of relationship the Authorised Representative had built with the client, which ensured the case continued through until completion Overall Length of Case 16-weeks from initial approach from the Authorised Representative through until funds were received This case generated a Gross Income of £17,300 and was the Authorised Representative first submission Senior Client Manager Overview This case is a great example of what can be achieved where the Authorised Representative was fully prepared to be engaged with both the client and his client manger at ALL stages of the process, including getting the clients authority to speak directly to the clients solicitor and worked in conjunction with the case manager as follows: Chasing up the legal conditions imposed by the clients i.e. Asbestos Survey/Management Report across the portfolio, EPC Certificates for all properties with a minimum rating of E Collecting the Assetz Capital Relationship Manager from Belfast Airport to introduce the RM to the client, which included a tour of the subject security
