- Client: International high-net-worth property investor with income generated from a substantial rental portfolio
- Portfolio: Four prime London properties with a combined value of approximately £90 million
- Challenge: Required substantial equity release at a higher LTV than many lenders would consider against prime property
- Finance: £67.5 million refinance at 75% LTV, with 20% of the facility placed as AUM and a five-year interest-only term
Equity release across a substantial property portfolio can become increasingly complex as the value of the assets and level of borrowing increase. Enness was approached by an international high-net-worth property investor looking to refinance a portfolio of prime London properties in order to release equity for future investments and repay existing debt.
The portfolio comprised four London properties with a combined value of approximately £90 million. Each property was valued at more than £20 million, placing the portfolio firmly within the prime property market.
The client’s income was generated through rental income from the properties. The objective was to refinance the portfolio as a whole and release a significant amount of capital, rather than arranging separate facilities against each individual property.
The size and nature of the portfolio presented a number of challenges. Lenders can take a more conservative approach when considering very high-value properties, particularly where the requested borrowing represents a substantial proportion of the overall portfolio value.
The client was looking for a higher LTV than many lenders would typically consider for prime property. A number of lenders were prepared to offer financing at around 50% LTV, but this would not have provided sufficient capital to meet the client’s requirements for debt repayment and future investment.
Enness therefore approached the private banking arm of a major UK lender with the capacity to consider a transaction of this scale. The lender was prepared to assess the portfolio and the client’s wider financial position on a bespoke basis.
Following negotiations, the bank offered a 75% LTV facility across the four properties. This resulted in a total refinance of £67.5 million against the £90 million portfolio.
As part of the agreed structure, 20% of the loan was placed with the bank as assets under management in the form of a bond. The facility was arranged at a rate of 1.5% above three-month LIBOR at the time, on a five-year interest-only term.
The resulting structure provided the client with substantial equity release while allowing the existing portfolio to remain in place. The capital could then be used to address existing debt and support future investment plans.
The case demonstrates how property portfolio finance can be structured for high-net-worth investors with substantial prime property holdings. At this level of borrowing, lender appetite, portfolio composition, rental income and the required LTV can all have a significant influence on the available financing options.
For investors seeking substantial equity release against a high-value property portfolio, specialist large mortgage finance can provide access to lenders with the capacity to consider significant borrowing requirements, subject to individual circumstances and lender criteria.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, valuation, property suitability and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise. Equity release increases the amount of borrowing secured against a property and may increase the overall cost of borrowing. Rental income is not guaranteed and properties may be affected by changes in rental demand, vacancy periods, market conditions and associated costs. Assets placed under management can fall in value and returns are not guaranteed.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
