United Trust Bank (UTB) Structured Property Finance has provided a £4.3m net facility to enable the owners of a trading commercial property in South-West London to pursue an ambitious planning application with a potential £60m GDV.
The Structured Property Finance team was approached to provide a £4.3m net facility to refinance the borrower’s existing debt and release a further £1m of equity. The borrower is a long-established business which has been trading from the same South-West London site for over 60 years. The business obtained planning consent in 2019 to extend the business premises and develop nine new apartments above and behind the existing building. The site was valued at £10m with this planning consent in place and the site already had a substantial commercial value.
However, in the last year, the borrowers consulted with an experienced developer acting as a planning and promotional partner who suggested that a new, more ambitious development might be considered by the local planning department. As such, the borrowers wished to refinance their existing facility and release a further £1m of equity, some of which would be invested in working up and pursuing a new scheme to create 60 new apartments over eight storeys whilst retaining the ground floor commercial space. The proposed new scheme would have an estimated GDV of £60m.
Although the site was a trading commercial asset, UTB’s Structured Property Finance team was happy to look at the planning angle and provide a £4.3m, 18-month facility with rolled interest so that it didn’t impact the cashflow of the underlying business. The intended exit is a sale to a forward funder/operator, most likely in the later living sector, once planning permission is obtained.
Gerard Morgan Jackson (pictured), head of structured property finance at United Trust Bank, said: “This was an unusual case in that the security property was the home of a long-established trading business. However, we had the benefit of knowing that the site had a solid commercial value and value as a development opportunity, albeit on a much smaller scale to the new plan the owner wanted to pursue.
“We were delighted to provide the funding the borrower required to put together a fully worked up proposal and we are confident they will be successful in their endeavours to gain approval for what will be an exciting and substantial development in a sought-after part of London.”
