Case Study · United Kingdom

Loan provided for redevelopment of Mail Delivery office in London

18 March 2019

Loan provided for redevelopment of Mail Delivery office in London

Commercial banks in the U.K. rarely provide loans for redevelopment projects.

Problem

  • A corporation had plans to purchase an old mail delivery office for redevelopment.
  • The company needed financing but was unable to obtain it from traditional banks, who rarely lend to redevelopment projects.

Solution

  • Rikvin Capital performed the necessary due diligence and underwriting and found that the property was in a prime location.
  • We were able to provide the loan at 60% LTV for a period of 6 months with a first charge on the property.
  • This enabled the borrower to purchase the property and apply for planning.
  • The borrower later refinanced the property after receiving planning permission.

Related: Read about when Rikvin Capital provided financing for purchasing property in the UK

  • Location: London, United Kingdom
  • Market Value: £2,650,000
  • Loan Amount: £1,500,000
  • Loan-to-Value: 55%
  • Duration of Loan: 6 Months
  • Payment Schedule: Balloon + Monthly Interest Payment
  • Asset Type: Commercial Building
  • Completion Time: 10 Days

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FAQ

Banks will not fund my UK redevelopment project. Can Rikvin Capital help?

Yes. The London case here lent £1.5 million against a £2.65 million former mail-delivery office (55% loan-to-value) in 10 days for a redevelopment that high-street banks would not fund. We lend on the existing property value and the borrower's plan, then exit via long-term refinance once planning is granted.

How does redevelopment-bridge financing work?

We lend against the current value of the building (its existing-use value), giving the developer time to apply for planning approval. Once planning is granted, the property's value rises, and the borrower refinances into either a development-finance facility or a long-term commercial mortgage at the higher valuation.

What is a "balloon plus monthly interest" repayment?

The borrower pays monthly interest through the loan term, with the full principal repaid as a single lump sum (the "balloon") at the end. The London mail-office case used this so the developer's cash flow was predictable during the planning period and the principal was settled at refinance.