- Property: Purpose-built specialist rehabilitation facility
- Facility: Care home with nursing and 23 bedrooms
- Development cost: More than £5M including land acquisition
- Loan amount: £3.4M
- Interest rate: 3.4% above Bank of England Base Rate
Refinancing specialist commercial property can require a lender with an understanding of the underlying business as well as the property itself. Enness was approached regarding a purpose-built rehabilitation facility that had been completed several years earlier but had not yet been moved onto a conventional term loan.
The three-storey facility was developed on a 0.5-acre site and comprised 23 bedrooms alongside substantial communal and specialist rehabilitation facilities. The development had a total cost of more than £5M, including the acquisition of the land.
The facility was established by STEPS to provide residential and day rehabilitation services for people living with neurological conditions, stroke, spinal cord injuries, acquired brain injuries, orthopaedic injuries and other complex trauma conditions.
Unlike a conventional care home focused primarily on long-term residential care, the facility was designed specifically around rehabilitation. Its facilities included a café, hydrotherapy pool, gymnasium and other activity spaces, with approximately 20.3m² of communal space per resident.
The main financing challenge was the existing lending arrangement. Despite the development having been completed, the business had not been able to refinance the existing facility onto a longer-term structure. The existing lender was charging interest at 12% per annum, creating a significant ongoing cost for the business.
Enness was approached after the business highlighted its refinancing requirement publicly. The objective was to identify a lender that understood the specialist nature of the facility and could replace the existing borrowing with a more sustainable term financing arrangement.
Given the social benefit provided by the business, Enness approached a bank specialising in lending to businesses operating in this area. The lender was prepared to assess the underlying business and the specialist property rather than treating the facility as a conventional commercial property transaction.
Following the lender’s assessment, Enness arranged refinancing of the £3.4M existing loan. The new facility was secured at a rate of 3.4% above the Bank of England Base Rate at the time.
The refinancing replaced the previous 12% per annum borrowing with a significantly different funding structure, reducing the immediate cost of servicing the debt and providing a more appropriate long-term financing solution for the completed facility.
The case demonstrates how commercial property finance can be structured around specialist businesses where the nature of the property and the services provided require a more considered approach from lenders. It also highlights the importance of identifying lenders whose lending criteria align with the underlying business model.
For businesses looking to refinance specialist commercial property, including care, healthcare and rehabilitation facilities, specialist lender access can help identify potential financing solutions based on the property, business model and wider circumstances, subject to lender criteria, valuation and underwriting.
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, due diligence and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances.
Risk Warning:
Property securing finance may be repossessed if repayments are not maintained. Commercial property finance carries risks, including changes in property values, operating performance, costs, market conditions and refinancing availability. Borrowers should ensure that any proposed financing remains affordable and that an appropriate strategy is in place to meet repayment obligations.
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.
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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.
