Left to right: Ajsela Cela (Manager), Gerard Morgan Jackson (Head of Structured Finance), Chris Walters (Manager), Thomas Ahearne (Analyst), James Greenyer (Manager) and Lucy Coleman (Assistant)

UTB lends £3.2m for development site acquisition

United Trust Bank (UTB) has provided a loan of £3.2m to help a customer who needed 100% funding to acquire a substantial development site.

The customer was an experienced building contractor and property developer with a strong track record of successful property projects in east London and was in the process of completing a development of eight apartments with an estimated gross development value of circa £4m.

The developer intended to retain the apartments to add to his buy-to-let portfolio.

With this project approaching completion, the customer identified a site suitable for his next development. 

The site already had planning permission for two blocks of 20 apartments with a gross development value of circa £12.5m.

The requested facility would enable the customer to acquire the site before settling the substantial stamp duty liability, make the required pre-commencement contributions to the local authority under the section 106 agreement and settle the current debt on the eight-apartment project.

The two key exit plans available for the deal were an investment finance loan on the eight-apartment block based on the circa £200,000 pa rental income generated once the units were put up to let or a full development funding package on the 40-unit project once the pre-construction work had been completed.

The equity available on the two property developments – along with the additional guarantees from the borrower – provided sufficient assurance to the structured finance team that the loan met its criteria and the £3.2m facility was agreed and drawn down just a few weeks after receiving the initial proposal.

With the borrower’s situation being quickly assessed, his existing portfolio and the potential for the recently proposed new development appraised, the team at UTB could make a speedy decision which enabled the borrower to complete the negotiations to acquire the site with the confidence of offering a completion date within weeks.

The customer was able to purchase the site at an advantageous price before commencing the planning proposal for his new project without any delay.

The customer’s choice to use UTB to fund the site acquisition costs and the exits saved the customer time and reduced the administrative burden he would have had to go through.

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