Development Exit Bridge for Monaco Resident on London New Build

Key figures:

• £28.4 million new build properties combined value
• 41 new-build flats
• 70% net LTV at £19.88million
• 0.7% interest rate per month
• 1.5% arrangement fee
• 12-month term with optional 3-month extension

The client:

My client is a UK national, now a resident of Monaco. He built his fortune as a property developer. The gentleman is a former client of our Managing Director, Hugh Wade-Jones.

The property:

He acquired a plot in Balham, South London for a new build block of 41 flats. The combined value of the plot was £28.4million. He had existing senior development finance and mezzanine loan debt on the property.

What were they looking for?

My client was looking to refinance off as much of the mezzanine finance as possible. This would save him profit in interest and then allow him more time to sell the individual units for better prices.

Why was it difficult?

The total loan to value (LTV) of the two existing loans was too much to be cleared in one go. The loan we arranged could clear the senior debt but not fully clear the mezzanine loan since this type of borrowing goes to such a high LTV.

What was the process?

Following a lengthy negotiation, it was agreed with the lender that they would allow for a small portion of the mezzanine loan to remain behind the new bridging loan and be considered as a second charge. Also, 40% of the individual sales would go towards repayment in order for my client to be able to break free from the expense of his mezzanine loan as quickly as possible.

The solution:

I secured for my client a 70% net loan to value at £19.88 million with interest rolled up on top. This was arranged with a fee of just 1.5% and an interest rate of 0.7% per month for a 12-month term, with the option of 3-months further extension.

Furthermore, to assist with clearing the outstanding mezzanine loan, I negotiated for the lender to release a further £1million after the first £7million worth of sales had been exchanged. Crucially, this was agreed following the exchange, not sale or completion, which was a very attractive deal for my client.