complex development projects

How three complex development projects were resolved

Development Finance Today has spoken to three development lenders about how they have gone about funding challenging cases.

Octopus Property

Octopus Property provided a £12.7m funding facility for the conversion of an old brewery building in Chiswick, west London.

The brewery had been converted into offices and the borrower had received planning permission to convert the offices into 14 residential units.

D'mitri Zaprzala, head of sales at Octopus Property (pictured above), explained: “It was a bold and striking scheme, but came with some potential hurdles that most funders could not overcome.

“One of the main issues was that the offices were still tenanted and many of the tenants were unable to vacate their premises quickly, delaying the development timeline.

“We worked with the borrower to enable him to acquire the properties and subsequently fund all of the costs of developing the properties.

“Due to the varying lengths of tenancy, we released funds only when monies were required to convert each office one by one.

“One way he was able to move tenants out quicker was to provide them with a new office space.

“We helped with this by funding the conversion of a dilapidated building on the site into a state-of-the-art office.

“Once the flats were completed, we released further equity to allow the client to move on to their next scheme, which was similarly as successful, and a little more straightforward.”

Iron Bridge Finance

Iron Bridge recently provided a £800,000 mezzanine loan, plus rolled up interest, for a 48-unit scheme located in the Home Counties, which comprised 35 private units and 13 affordable units.

Iron Bridge secured the loan over 35 units, while the remaining 13 units were sold simultaneously to a housing association.

The loan was for 24 months at 69% loan-to GDV (including senior debt).

Martin Gilsenan, director of sales at Iron Bridge Finance (pictured above), said: “We discovered that the borrower was not purchasing all of the land that was covered by [the] planning consent.

“He had no rights in order to carry out part of the works required within that consent as he did not own that land.

“We discovered this just prior to completion of the loan and we informed the senior lender of the issue, which had not been highlighted by their own legal team.

“Due to this intervention, the borrower was able to get the vendor to agree to amend the sale agreement to allow him access to that land to fully implement the planning consent – without this, he would not have been able to do this, with potentially disastrous consequences for the developer.”

Roma Finance

Roma Finance recently completed a deal for £202,000 over nine months for a customer who purchased a property at auction (pictured above) for £270,000 in December.

The team at Roma had to work to ensure that the finance was provided before completion on 10th January.

Scott Marshall, managing director at Roma Finance, said: “This case demonstrates the situation when another lender can’t deliver bridging finance in the timescales required for completing this type of purchase.

“We also had limited time due to a lender pulling out of providing funding, losing valuable time.

“This was compounded by the festive holidays, meaning that we had to work quickly on all [the] available days we were in the office.

“We managed to process the case in just 12 working days, much to the delight of the introducer and customer.”

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