- Client: European real estate investor
- Property Location: Central Italy
- Property Value: Approximately €7 million
- Loan-to-Value: Approximately 50%
- Term: One year, with an option to extend
- Purpose: Acquisition of additional real estate
Enness was approached by an experienced European real estate investor looking to release capital from a property they owned in central Italy. The property had been purchased for approximately €7 million several years earlier and was being used as an investment asset, generating income through a combination of holiday lets, events and exhibitions.
Unlike the client’s other properties, which were already leveraged, this particular asset had no existing borrowing against it. The client wanted to make use of that available equity to fund further real estate acquisitions.
The timing of the transaction was important. The client had already agreed the sale of other assets within their portfolio, with completion expected within the following few months. The proceeds from those sales were intended to provide the exit for the proposed short-term facility.
Finding suitable bridging finance against an Italian property presented a challenge. Local lending requirements and the administrative processes involved meant that the client needed a lender comfortable with the asset, jurisdiction and proposed exit strategy.
Enness identified a lender willing to provide funding at approximately 50% LTV, structured across two tranches. The facility was arranged for an initial 12-month term with the option to extend for a further year, providing additional flexibility should the planned asset sales take longer than expected.
As the client expected to repay the borrowing within a few months, the early repayment terms were particularly important. The structure allowed the early repayment charge to apply only during the initial period of the facility. This meant the client could repay the borrowing following the anticipated asset sales without being committed to a long-term financing arrangement.
The facility was arranged at an interest rate of approximately 1% per month, compared with alternative terms the client had received ranging from approximately 1.15% to 1.5% per month. The transaction was executed within a matter of weeks, giving the client access to the equity in their Italian property in time to support their wider investment plans.
The case demonstrates the importance of taking a international approach to property finance when assets are held across different jurisdictions. Local market conditions, lending appetite, legal processes and the proposed exit can all influence the availability and structure of finance.
For investors looking to release capital from international property to fund further acquisitions, speak to a mortgage specialist to discuss your requirements.
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, legal due diligence and lender criteria. Bridging finance is short-term borrowing and may carry higher costs than conventional mortgage finance. Property values can fall as well as rise, and exchange-rate movements may affect the sterling equivalent of international assets and liabilities.
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.
