Navigating complex property finance transactions requires expertise, problem-solving, and strong relationships with lenders. This case study showcases how Aria Finance successfully structured a bespoke loan solution for experienced portfolio landlords facing significant legal and planning challenges.
The Client:
Our clients are large portfolio landlords with extensive experience in property development and operational management. Their goal was to purchase a semi-commercial asset and refinance a Purpose-Built Student Accommodation (PBSA) property. However, the transaction presented multiple hurdles that required innovative solutions.
The Situation:
The deal involved two key challenges. The first challenge was related to the semi-commercial asset, which had non-compliant extensions that had been carried out by a previous owner. Additionally, the property was being sold by receivers, adding layers of legal and financial complexity that needed to be addressed. The second challenge concerned the refinancing of the PBSA, which was restricted by a title condition that prevented it from being remortgaged or let to non-students. Furthermore, the property had a small commercial unit on the ground floor.
Our Solution:
Aria Finance leveraged its lender network and industry expertise to structure a solution that addressed these challenges effectively. To begin with, we identified a lender with a flexible risk appetite and a pragmatic approach to handling intricate transactions. Senior management was involved from the outset, ensuring that potential issues were anticipated and mitigated. To manage the semi-commercial asset challenge, we documented the clients' strong development track record to instil confidence in the lender. A retention was held from the loan to cover potential remedial works on the non-compliant extension, thereby managing the lender’s risk. Planning approval was secured just one month after drawdown, allowing the retention to be released to the borrowers without delay. Given that the residential income across both assets more than covered the debt service cover requirements we agreed with the lender to price this as a residential investment in bespoke circumstances, ignoring the commercial elements.
For the PBSA, we identified that the title restriction could be lifted within a specific timeframe that was shorter than the loan term. Using this insight, we negotiated a pre-agreed interest rate discount, ensuring that the clients benefited from lower financing costs once the restriction was removed. Despite the need for multiple credit reviews and complex legal work, we worked closely with the lender to navigate these challenges, ensuring that the deal progressed efficiently and without unnecessary delays.
Benefits & Results:
This case study highlights the power of collaboration and strategic thinking in specialist property finance. The tailored loan structure provided the clients with a market-leading solution that met their objectives while mitigating lender risk. The bespoke pricing arrangement, which incorporated a pre-agreed rate reduction upon the removal of the PBSA title restriction, ensured significant long-term cost savings. The early engagement with all stakeholders facilitated the proactive resolution of legal and planning issues, preventing any unnecessary setbacks. The seamless partnership between Aria Finance and the lender demonstrated industry best practices and ensured the successful completion of a highly complex transaction.
This case exemplifies Aria Finance’s commitment to delivering innovative, client-focused solutions in the specialist property finance space, reinforcing our position as a leader in the industry.
