43% LTV on €14 Million Tuscan Villa to Raise Renovation Funds

• Client: International business owner with multiple sources of income across different currencies
• Property: Tuscan estate valued at approximately €14 million, including a vineyard and golf course
• Challenge: Required substantial capital for renovation works despite being an overseas borrower purchasing in a relatively illiquid Italian property market
• Finance: 43% LTV facility with €2.5 million retained as assets under management, at 1.4% variable for two years

Raising capital against a high-value property in Italy can be challenging for overseas borrowers, particularly where the asset is unusual or relatively illiquid. Enness was approached by an international business owner looking to release funds against a substantial estate in Tuscany to finance renovation works.

The property was valued at approximately €14 million and comprised an extensive estate including a vineyard and golf course. The property required significant renovation, and the client wanted to release capital to fund works across both the Italian property and a separate London property.

The initial requirement was to raise approximately 50% of the property’s value. However, the client’s international profile and the nature and location of the asset created several challenges. The client received income from multiple international businesses and across several currencies, requiring lenders to take a broader view of his financial circumstances.

The client had also already approached four banks without securing suitable terms. Lending to non-residents against high-value Italian property can involve additional considerations, particularly where the asset is a large estate with comparatively limited liquidity.

The transaction also involved the Italian legal process, which introduced additional documentation and timing considerations for an overseas borrower. A lender with experience of international clients and Italian property was therefore required.

Enness approached a private European bank with which it had an established relationship. Following discussions around the client’s circumstances and the underlying property, the lender was prepared to consider a bespoke structure.

As part of the agreed arrangement, the client retained €2.5 million from the facility as assets under management with the bank for the duration of the loan. This provided the lender with additional comfort while allowing the client to access a substantial proportion of the required capital.

The resulting facility provided 43% loan to value (LTV) against the €14 million property. The loan was arranged at a variable rate of 1.4% for a two-year term at the time.

The two-year structure was aligned with the client’s intended renovation programme and provided a defined period in which to carry out the works before considering the next stage of the financing strategy.

The case demonstrates how mortgage finance in Italy can require a specialist approach where an international borrower is seeking finance against a high-value and less liquid property. The location, property characteristics, residency, income structure and wider financial position can all influence lender appetite.

For international clients looking to raise capital against European property, specialist mortgage finance can help identify lenders able to consider complex cross-border circumstances and bespoke financing structures.

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 and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances.

Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise. Where assets are used as security, borrowers may lose those assets if the borrowing cannot be repaid. Assets placed under management can fall in value and returns are not guaranteed. Where income, assets or borrowing are denominated in different currencies, exchange-rate movements may also affect affordability and the cost of borrowing.