Gross Loan Amount:
£3,800,00
Property Value:
£5,810,000
LTV:
65%
Initial circumstances
We were introduced to a new broker who had a Foreign National client in need of funds. The client was looking to purchase a shopping centre. The asset had been previously sold for £28million in 2015 and went back on the market during the pandemic for a reduced price. The borrower (already an owner of a smaller shopping centre) saw this to be the perfect time to invest, with lockdown restrictions lifting and pent-up shoppers ready to spend their lockdown savings.
Despite using bridging loans in the past, they had been rejected several times as rental income had dropped over the year. They were running out of time to get a solution in place.
With the asset still generating good rental income and considering the borrower’s expertise, the MFS underwriters were confident in the deal’s potential.
Before receiving the fees from the client, a dedicated MFS underwriter spent the initial part of the case working alongside valuers and solicitors to guarantee the deadline could be met. We understand that our clients time is precious and with so little time left – we did not want to waste their time or let them down.
MFS Solutions
Once we knew we could meet the deadline, it was time to tackle the complexities of the deal. The asset holds 70 units, with over 50 leases in place that needed to be checked by our underwriters.
Due to the short timescale, it was imperative to keep communication channels running between the broker, the seller, the selling agent and ourselves to keep everyone in the loop.
Due to the nature of the property, we knew that going off the vacant possession would not reflect the actual occupied value. With several tenancy’s already in place, it was never going to be a ‘vacant’ asset. Our underwriter was able to pull through and lift the value from the bricks-and-mortar value of £2.3million – which wouldn’t have covered the loan amount.
On regular cases, legals often require a report on each lease to guarantee everything is satisfactory and is as presented by the seller. With so many leases and a short time frame, our underwriter was able to agree to reviewing 10 randomly selected leases in which the seller would have no input. This flexibility allows us to deliver for the client, as well as being confident about the risk of the deal to MFS.
The Benefits
In these complex cases, dedication from the underwriter is crucial. Despite the complicated paperwork, the deal completed in approximately 4 weeks.
The broker and borrower were delighted that we had been able to complete when they had been let down by other lenders.
Further reading:
- Featured Product: Complex Bridging Loans
- Explainer Video: Complex Bridging Loans
- Tool: Bridging Loan Calculator
- Report: The post-pandemic outlook of the UK commercial property market
- Blog: Commercial property tax guide – what taxes do investors need to pay and what are the allowances?
- Blog: What is the minimum EPC rating for commercial property?
