Case Study: Flexible Bridging Facility Supports £3.78m Mixed-Use Conversion

Aria Finance structured a flexible bridging facility to support an experienced developer with a part-let commercial property in Surrey. The funding enabled the client to repay their existing mortgage and complete a residential conversion, while accommodating changing circumstances during the transaction. By adapting the structure mid-process and securing an enhanced desktop valuation, we delivered a solution aligned with the borrower’s immediate needs and long-term exit strategy.

The Client:

The client is an experienced property developer with a strong track record of converting commercial buildings into residential units locally. Having recently completed two similar projects nearby, he was able to move his workforce directly onto this scheme and progress the works efficiently.

The Situation:

The security property was a freehold modern office building in Surrey with a total value of £3,780,000. This comprised £2.3 million attributed to the commercial units and £1,480,000 in residual value. Half of the building remained let to a commercial tenant with an 18-month unexpired lease, while the ground and first floors were vacant and had prior approval to convert into 16 one-bedroom flats. This created a situation where one title had two very separate strategies in the short term, requiring two distinct valuation approaches and highlighting the need for a single lender able to support the overall project.

The client required funding to repay an existing mortgage of just under £2.1 million and to complete approximately £500k of outstanding works. Initially, the transaction was structured as two separate facilities: a commercial term loan at 75% LTV on the remaining let element and a development loan for the residential conversion.

During the process, the main commercial tenant indicated they were actively seeking alternative premises and might break their lease early. Given this uncertainty, and the client’s potential strategy to convert the entire building sooner than originally planned, it was agreed that committing to a long-term commercial term facility was not prudent. At the same time, the client had injected additional cash into the project and had already progressed the works, meaning the full development loan was no longer required. As a result, the original dual-loan structure no longer suited the client’s evolving position.

Our Solution:

We sourced an alternative product and restructured the transaction into a single bridging facility secured across both the commercial units and the residential element. This provided the flexibility the client required, enabling him to repay his existing lender while retaining control over the pace and funding of the remaining works.

The total gross loan was agreed at £2,460,500, representing 70% gross LTV, with a day-one advance and a structured drawdown facility to allow the borrower to access further capital in tranches as required.

A key element of the transaction was the valuation. Working closely with the client and the valuer, we demonstrated the progress of works through updated photos and videos, enabling a desktop revaluation that increased the residual value to £1,480,000, £330k higher than the valuation received five months earlier. This uplift strengthened the overall leverage position and improved the final structure for the borrower.

The facilities were consolidated into a single bridging loan, the updated desktop valuation was agreed, and the transaction completed approximately two months later.

Benefits & Results: 

The completed facility allowed the client to repay the £2.071 million existing mortgage in full and access £2.3 million immediately to continue progressing the scheme. The flexible drawdown structure ensured further funds could be drawn as needed, without unnecessary borrowing from day one. By avoiding a long-term commercial term loan amid tenant uncertainty, the client retained strategic flexibility, while the enhanced desktop valuation further strengthened the deal.

The planned exit is the refinance of the 16 completed residential flats, alongside the commercial units, onto longer-term facilities.

This transaction followed our earlier £10.4 million bridging and development funding package for the same client, in which we structured the acquisition and large-scale redevelopment of two commercial buildings into residential units. Having successfully delivered that complex phased funding arrangement, the client returned to Aria Finance to support this additional asset within their portfolio. The repeat instruction reflects the strength of the relationship and our ability to support experienced developers across multiple projects, from large-scale development finance through to flexible bridging solutions tailored to evolving circumstances.