Signature Property finance contacted by broker to arrange £485k bridging loan to facilitate the purchase and conversion into residential use of commercial property in Usk. The highly experienced developer was let down at the last minute on a Saturday, by a high-street lender.
“When a funder pulls out at the eleventh hour it can spell disaster for a deal of this size, but Signature were prepared to not only listen, but work hard to understand the deal, before putting the wheels in motion, very quickly indeed. It’s not every day an alternative lender moves so quickly to ensure a deal is successful.”
When time is pressing
For this project, the developer was purchasing a farmhouse and associated outbuildings, one of which was a disused Quaker meeting house, to convert into residential housing.
The proposed development had planning consent for conversion of the barns into three and four-bedroomed properties, with the rundown farmhouse in need of modernisation.
The property is close to Newport, with the region enjoying a significant rise in property values since the Severn Bridge toll was removed, running at about 10% over the year.
To maximise return, the properties will be converted to family homes, rather than small apartments or HMO, with the stunning rural hilltop location expected to be a major factor when it comes to letting or selling the finished development.
Recognising the likely impact of the high-street lender pulling out of the deal at the eleventh hour, Newport-based broker, Flexible Commercial Funding, contacted Signature Property Finance, realising its knowledge and lending history in Wales, offered the best chance to deliver the required funding.
A Signature solution
It was a Saturday morning when the developer contacted their broker about the high-street lender pulling the plug on the deal. The broker was in Europe skiing, but contacted Tony Gilbertson, Signature CEO who was at the Millennium Stadium to watch Wales in the Six Nations rugby.
Despite the urgency and the distance involved, Signature was able to get the wheels moving and arrange a valuation of the properties concerned. Once it was determined our acceptable property criteria had been met, we could look at the figures and the exit plan to get the deal done.
The time constraints did not allow for a site visit to listen to the developer’s ambitious plans. But our knowledge of the market in that region, combined with the experience of a developer with a portfolio of approximately £15M and a 60% LTV, ensured the decision to lend was not a difficult one.
A 6-month loan was agreed, which offered sufficient time for the developer to sell other assets to repay the loan, but also enough time to consider refinancing onto a development facility, something which signature are helping the developer consider.
“This is not the first time Signature has stepped in to rescue a deal following a high-street lender’s last-minute decision to remove funding. And it won’t be the last. This was a good project, undertaken by an experienced developer, working with a professional broker, in an area we know well – perfect for Signature. Wales beat England too, so a special day in more ways than one!”
Tony Gilbertson – CEO Signature Property Finance