A limited company client got in touch looking for finance to enable them to purchase a block of industrial serviced offices valued at £6.4 million in London’s vibrant East End. In keeping with the client’s wider business model they had leased the building for a period of time and spent a significant amount of money transforming the building into multiple units to be let to local businesses.
An option to purchase the building at a preferential rate via a formal option agreement was negotiated by them and the existing leaseholder. The limited company needed to borrow 75% of the open market value to cover the purchase, cost of the refurbishment works and a small capital raise for further property investment purposes. This equated to 106% of the option agreement purchase price and allowed them to raise £4.8 million on a 10-year facility, fixed for five years.
They were struggling to secure further funding from their existing bank as they had reached their lending exposure. Other lenders were also reluctant to lend to them as it was a serviced property model and the client had less than two years’ track record on the current asset. We were able to use the success of the wider limited company group to mitigate the risk of them having less than two years’ track record. The wider group had significant experience with running serviced rental properties and demonstrated a strong profit within the business which Interbay were able to cross charge into.
Broker Daniel Churchill at Pure Funding Solutions and InterBay’s specialist finance account manager Davey Gurm worked closely together to get the deal through as smoothly as possible. Davey worked with the client to get the information needed to present it to our Transactional Credit Committee for approval. He also worked with our experienced underwriters to help them understand the case, as well as the solicitors to ensure all the necessary legals were in order, to secure the mortgage the client needed to make the purchase.