Development Finance for Scottish Estate

• Client: British national and resident
• Property: Scottish estate with manor house, holiday lodges, lake and woodland
• Property value: £6.55M
• Loan amount: £4.7M
• LTV: 58%
• Rate: 8% with 2% fee

Enness was approached by a British national and resident seeking development finance against a large Scottish estate valued at £6.55M. The estate included a listed manor house, holiday lodges, a lake and woodland, with the proposed works focused on creating a new wedding venue and enhancing the existing buildings.

The development plans included converting existing outhouses and a barn, as well as constructing a new function room. Funding therefore needed to provide both an initial facility and additional capital as the works progressed.

The client required a total facility of £4.7M, with £3.8M available from day one and a further £900k available through subsequent drawdowns. This represented an overall LTV of 58% against the estate.

Development finance is commonly structured around the progress of a project, with lenders releasing funds in stages as works are completed. For this transaction, the lender provided the initial funding to refinance the existing debt and allow the development works to begin, with further funds available as the project progressed.

One of the challenges was the impact the pandemic had had on the client’s wedding business. Rather than relying solely on historic trading performance, Enness was able to source a lender willing to consider projected revenue from future bookings when assessing the proposed development.

The resulting facility provided the client with access to the capital required to move the project forward while retaining the flexibility of staged drawdowns. The terms agreed were an 8% interest rate with a 2% fee.

Development projects can require financing structures that account for the property, existing debt, proposed works and the anticipated income or exit. Enness works with specialist lenders to arrange property development finance for projects where conventional lending may not provide the required structure.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, valuation, due diligence and lender criteria. The terms described relate to a historical transaction and are not indicative of current or future pricing.

Risk Warning:
Development finance involves risk, including the possibility that construction costs increase, works are delayed or the anticipated income or exit does not materialise. If finance is not repaid as agreed, property and other assets provided as security may be at risk. Borrowers should ensure they have an appropriate development plan and credible exit strategy before proceeding.