Recognise Bank has completed a £364,000 commercial bridging loan to support the purchase of an 11-bedroom hotel in Bournemouth, as borrowers seek to reposition the asset for the local rental market.
The 12-month facility, agreed at 70% loan-to-value with retained interest, was arranged for a couple who run separate businesses in the car and beauty sectors and have also built up an investment property portfolio.
The deal was introduced by Ian Monks of Commercial Mortgage Solutions and related to a closed bed and breakfast property in a seaside location where there is said to be an oversupply of overnight holiday accommodation.
The vendors had operated the hotel as what was described as a lifestyle business, with limited trading history and no formal accounts available. That meant the case required a more considered underwriting approach, particularly as the borrowers were not simply acquiring the asset to continue operating it in its existing form.
Following completion, the borrowers intend to apply for planning permission to convert the property into a large HMO aimed at young professionals. In the meantime, they plan to reopen and trade the B&B in order to capture seasonal demand and keep the building in active use.
The transaction became more urgent after a previous lender withdrew at a late stage, placing completion at risk. Recognise Bank said it was able to step in with funding that matched both the immediate business plan and the proposed longer-term change of use.
The bank accepted a readdressed valuation and used title indemnity insurance to help progress the case. It completed the loan within 22 working days from application.
Heather Mitchell (pictured), lending manager at Recognise Bank, says: “This case required a considered approach given the lack of trading history and the proposed change of use. The borrowers had a clear plan for both the short-term operation of the asset and its longer-term repositioning, which provided a solid basis for the lending decision.”
“Timing was a key factor, particularly with the previous lender withdrawing at a late stage. By taking a pragmatic view on valuation and structure, and working closely with all parties involved, we were able to complete the transaction within the required timeframe and support the acquisition.”
Monks adds: “This was a time-sensitive case where the clients were at risk of losing the property following a change in position from another lender. It was important to find a lender that could understand both the immediate trading plans and the longer-term strategy for the asset.”
“The team at Recognise Bank were clear and responsive throughout, working collaboratively to ensure the deal progressed efficiently and completed within a tight timeframe.”
