United Trust Bank’s development finance team was approached to consider providing a part refinance and development facility for an existing customer.
The developer was already quite advanced on a large and complex mixed use project in North London. The scheme included the conversion of an office block to provide retail space on the ground floor and offices, residential apartments and a hotel on the upper floors. In addition, an adjoining block to the rear had consent for conversion to a further 25 large apartments.
The client’s clearing bank had funded the commercial scheme and once it had been let and occupied they wished to impose restrictions on the developer which did not suit his plans. The lender was insisting that, rather than provide funding to allow completion of the entire residential scheme in one phase, the developer should build, complete and sell just six of the units before they would consider funding the rest of the scheme.
Having decided to switch lenders, UTB was able to help the client to split the title by separating the commercial scheme from the residential scheme, with UTB providing an overall facility of £12.5m. £7m repaid the clearing bank to release the land, and the balance of the facility provided the funds to complete the already well-advanced construction works for the residential development. At the point of drawdown, 6 of the 22 apartments were complete with 2 units having been sold and contracts exchanged. A further 2 units were under offer with reservation fees paid. At the point that UTB took over the development funding, the works were more than 50% complete.
The development is progressing and selling very well.