- Client: Property development team
- Property Type: Derelict care home on a large plot of land
- Property Value: £5,250,000
- Loan Amount: £3,500,000
- LTV: 70%
- Product: Unregulated bridging loan
- Interest: 9% per annum, part rolled and part serviced
- Term: 18 months
Enness was approached by an experienced property development team seeking approximately £3.5 million of bridging finance to acquire a vacant care home in London. The property was valued at £5.25 million and occupied a substantial plot of land, presenting the developers with several potential opportunities.
The original plan for the site had been to redevelop the care home into a residential housing scheme, reflecting the significant shortage of housing stock in the area. However, having extensive experience across the property sector, the development team identified another opportunity. Rather than disposing of the existing care home use entirely, they recognised the continued demand for specialist care in the area and identified an established care home operator that was prepared to lease the property once refurbishment and extension works had been completed.
The time-sensitive nature of the acquisition meant that securing finance quickly was critical. Competition for the property was strong, and the developers needed certainty of funding to proceed with the purchase. Enness therefore approached specialist bridging lenders capable of considering the value of the property, the strength and experience of the development team and the proposed plans for the site.
Enness negotiated an unregulated bridging facility of £3.5 million, representing 70% LTV against the £5.25 million property value. The facility was structured over an 18-month term, with interest split between serviced and rolled-up payments to provide an appropriate balance between cash flow and overall funding requirements. The interest rate was 9% per annum.
Given the urgency of the transaction, speed was a key consideration throughout the process. Following receipt of the valuation, Enness was able to arrange the funding within ten working days, allowing the development team to complete the £5.25 million acquisition and secure control of the site.
Following the acquisition, the developers progressed plans for the property while also exploring the wider potential of the site. They submitted proposals to the local authority to develop new homes on part of the land, helping to address local housing requirements, while continuing with plans to refurbish and extend the care home for the identified operator.
This case demonstrates how bridging finance can provide experienced property developers with the speed and flexibility required to secure opportunities where conventional finance may not be suitable within the required timeframe. By structuring the facility around both the asset and the proposed exit strategy, Enness was able to help the client secure the property while progressing a broader development and refurbishment strategy.
Risk Warning:
Bridging finance carries risks. Property acquisitions and development projects can be affected by delays, increased costs, planning decisions, changes in market conditions and fluctuations in property values. If you do not meet the terms of a bridging facility, the lender may take enforcement action against the secured property.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, valuation, project assessment and lender criteria. Terms and availability will vary depending on individual circumstances and the proposed transaction.
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.
