Loan type: Bridging Loan | Loan value: £18,235,415 | LTV: 68.1% | Term: 12 Months
At Aria Finance, our clients benefit from our extensive industry relationships, built up over the past two decades. This case study highlights the power of these connections and how they enable us to deliver extraordinary. By leveraging our strong lender partnerships, we successfully navigated a complex financial challenge of experienced property developers, ensuring the completion of their large residential weighted semi-commercial project.
The Client:
Our clients are very experienced property developers and landlords, who have over 25 years of experience investing in property. Collectively, they own a substantial property portfolio valued at over £100m.
The Situation:
The clients had previously secured a development facility for a semi-commercial property, comprised of 2 commercial units and 38 residential flats. When they initially approached us, 14 flats were left to sell, 6 were under often and 18 had already exchanged.
However a significant hurdle had arisen, the property hadn't received full building regulations sign off, due to the private building control firm going into administration before issuing final certificates. Consequently, no one could move into the development until the building received full sign off and outstanding sales were unable to complete. The original development facility was approaching term and, due to the delay in sales being able to complete, there was an outstanding balance of £16,567,251 and there was an outstanding balance to be paid to the main contractor.
Our Solution:
A bridging loan was required to refinance the outstanding development facility and cover the accruing interest. However, this wasn't a straightforward transaction due to the size of the loan required, over £18m, and the circumstances surrounding. We collaborated closely with the lender to secure two crucial exceptions for our client.
Firstly, we negotiated for the interest to be rolled up rather than retained allowing the client to secure a higher day-one net loan. Although this wasn't standard process for the lender they agreed, permitting the interest roll up until it reached 73% LTV.
The second exception related to our clients' personal guarantees, an area that our clients were particularly sensitive about. Working closely with the lender we were able to agree that the lender would release the personal guarantees once the LTV of the loan reduced to 50% whilst offering a reduced day one PG.
Benefits & Results:
Throughout the process, we maintained close contact with the lender and our clients to ensure the requested exceptions were supported and agreed. Delivering a bridging loan of this size with the exceptions in place in a real testament to the strong relationships we hold here at Aria Finance with our lender partners. Creative loan structuring such as this is not something that every broker can achieve for their clients.
Despite receiving the valuation report just one day before completion, all parties stepped up, working diligently to ensure completion could be delivered within 24 hours, in the best interest of the client.
We are delighted to have facilitated an £18.2m bridging loan in just 23 days, providing our clients the time they needed to obtain full building regulation sign-off to complete on the sales of the units.
