United Trust Bank (UTB) has provided a £3.7m commercial bridging facility to support the acquisition of a former public house in north London earmarked for redevelopment into a £25m co-living scheme.
The funding, delivered by United Trust Bank’s property development team, was advanced to a special purpose vehicle formed by value-add investor-developers including Bernard Margulies, director of BMR Property Group.
The loan enabled the off-market purchase of The Hendon pub prior to the grant of planning consent.
The 12-month facility totals £3.7m, including a VAT loan, and was structured at 75% day one loan-to-cost.
UTB agreed to lend on the basis of existing use value, providing the borrower with certainty of funds within a tight completion window.
The borrower was committed to completing the acquisition before a planning decision had been issued.
According to UTB, this required a rapid appraisal and credit approval process to ensure funds were available ahead of the target completion date.
Daniel Carlisle, senior director – property development at United Trust Bank, met the SPV’s principals on site two weeks before the intended completion to review their requirements.
A proposal was prepared and progressed through credit the following week, allowing the transaction to complete on time.
Planning approval, subject to Section 106, has since been secured. The proposed scheme involves demolition of the existing building and the construction of a new public house alongside 76 co-living apartments with dedicated co-working space.
The development will range from three to five storeys and is expected to have a gross development value of approximately £25m.
Discussions are now underway regarding a development finance facility from UTB to fund the build phase.
Bernard Margulies, director of BMR Property Group, says: “The success of this transaction was dependent on achieving a quick turnaround.
“I am delighted with how swiftly Daniel and the UTB team appraised and understood what we required and subsequently set about delivering the funding to complete the acquisition on time.
“I look forward to working with UTB again in the future.”
Carlisle adds: “In challenging markets, finding and securing off-market opportunities with the potential for planning gain can give experienced developers an important advantage.
“However, acquiring sites ahead of planning approval is not without risk and many lenders are understandably cautious.
“At UTB, we take a pragmatic and considered approach, focusing on the strength of the sponsor, the quality of the opportunity and the work already undertaken to de-risk the planning process.
“In this case, we were pleased to support a new customer with a time-critical acquisition and look forward to continuing the relationship as the project progresses into development.”
