Development finance
To refinance an existing bridging facility and fund the construction of nine additional residential units within an established mixed-use property.
The funding needed to refinance a £3.7m bridge and support development works without bringing additional security from the client’s wider portfolio into the transaction.
The client, an experienced property developer and long-standing relationship, owned a Wood Green property comprising a ground-floor retail unit with 13 residential flats above.
Planning permission had been secured to extend the building upwards by three storeys, creating a further nine self-contained flats and taking the projected Gross Development Value to £10.9m. The next step was to refinance the existing £3.7m bridging facility and fund the works.
The established investment and proposed development needed to be brought together within a funding structure that clearly separated their different risks and requirements.
The lender selection also needed to account for the borrower profile, a right-to-light matter and associated insurance, while protecting development funding throughout the build.
We considered the existing investment and proposed development separately, recognising that each required a different approach to funding.
The priority was to refinance the established investment without extending security across the wider portfolio, while ensuring the development facility had sufficient funding throughout the construction programme.
We explored a structure that kept the investment and development requirements distinct, allowing each element to be assessed on its own characteristics while forming part of a wider funding strategy.
A £7.21m funding package was secured, refinancing the £3.7m bridging facility and funding construction of the nine additional residential units.
The investment element was serviced from established rental income and no additional buy-to-let assets from the wider portfolio were required as security. Development funding covered 100% of construction costs, ring-fenced and released through staged drawdowns in line with the build programme.
The transaction completed in under four months, despite the additional legal, insurance and borrower considerations involved.
The transaction formed part of a wider relationship with an experienced developer rather than being considered in isolation.
By separating the investment and development elements and considering the client’s wider circumstances from the outset, the required funding could be secured without bringing additional assets into the transaction.