Property Finance Case Studies

Our commercial mortgage consultants have backgrounds in the banking sector and can offer added experience and advice to clients in respect of structuring commercial mortgages.

£1.5m Sterling-brokered deal sees Six Degrees rising

East Midlands commercial finance specialists, Sterling Capital Reserve, has brokered a £1.5m loan to bring forward a new student housing development in Nottingham.

Six Degrees

The finance package has been put together to develop Six Degrees, a brand new 46-room, purpose-built, apartment block for students in Nottingham city centre. The scheme, by local man Taj Ubhi is set to be finished by September 2013.

Nic Rotton of Sterling Capital Reserve, said: “Taj’s story is a familiar one; he is a successful local developer who had found a site and obtained planning permission. He had tried all the usual bank sources with no luck.

Taj Ubhi says: “I’m delighted that the deal has gone through so quickly. I’ve known Nic for some years, and Sterling was the obvious phone call to make for me as they’ve delivered in the past. Developers are increasingly turning to brokers such as Sterling to raise finance. My advice to others in the same situation is to give Sterling a call – you have nothing to lose and they really do take a personal interest in your scheme. Nic and his team have gone beyond the call of duty to make this deal happen, and I couldn’t be happier with the way it’s gone.”

Taj adds: “Traditional student accommodation has hundreds of rooms crammed in, which we feel de-personalises living and space becomes overcrowded. We've specifically targeted a lower number of beds in a prime location to give the security,  design and comfort of a new build with the personal experience of living in a smaller building.”

This type of deal is typical for developers who are struggling to find finance, says Nic: “We see schemes like this regularly where quality borrowers with good schemes simply can't raise finance from the more mainstream traditional banking sources. With our funds coming from specialist funders, we are happy to assist and make deals work for everyone.”

Sterling also operates a mezzanine finance company Strata Finance – a 'dating agency' for borrowers and lenders within the commercial property market. It is also the regional sponsor for ThinCats.com, a peer-to-peer lending site which unites investors and borrowers.

Refinance of Large Retail Food Shop

For: Ground Floor Shop & 1st Floor Offices
Location: Nottingham
Amount: £350,000

The client had bought an ex Kwik Save Store and turned it into one of the largest Ethnic Retail Food Shops in the Midlands.

Due to first year losses, existing bankers were nervous. However, turnover and profitability was increasing rapidly as the business settled down and the client also leased out the first floor offices to one of the local Colleges.

Our refinancing deal enabled the client to consolidate several existing loans, which provided a cash flow benefit as well as releasing some additional capital.

  • A 15-year repayment facility was agreed at bank base rate plus margin 2%.
  • Loan to value 70%.

Garden Centre Refinance

For: Garden Centre, off busy main road
Location: Lincolnshire
Amount: £550,000

The site was part of a larger Group and our client was seeking to demerge from the Group and had been given the opportunity to buy the freehold land at a discounted price.

The Group's bankers were not very enthusiastic about assisting, notwithstanding the unit had a profitable track record.

  • Sterling arranged a mortgage of £500,000 over 15 years, plus a seasonal overdraft facility of £50,000.
  • Both facilities at bank base rate plus margin 2%.

Investment Property Portfolio 2

For: Investment Property Portfolio, value £690,000
Location: Leicester
Amount: £525,000

Mix of retail, factory and residential. Total rental income £103,000 per annum. Our deal enabled our client to go out and purchase 3 more Commercial Properties. His existing funder felt this was too big a jump in one go and was only prepared to fund one acquisition.

  • Sterling arranged a mortgage of £460,000 over a 15 year repayment period, at bank base plus margin 2.5%.
  • Our deal had the joint benefits of allowing the client to expand at a faster pace, provided him with a longer repayment period, and also showed 0.5% off his existing interest rate.

Hotel and Restaurant

For: Hotel & Restaurant in a busy Market Town, North Wales
Location: North Wales
Amount: £250,000

The client was seeking funds to extend the Restaurant where demand was very strong.

Existing bankers were not being overly helpful; there had been a recent change in Manager and the new incumbent seemed cautious.

  • Sterling arranged a mortgage of £250,000 to repay existing borrowings and cover the extension costs.
  • A 15-year repayment facility was agreed at bank base rate plus margin 2%.

Property Development Facility 2

For: Development Facility for 9 houses
Location: Cotswolds
Amount: £1,000,000

The client owned a Residential Care Home, which had closed down because it was not "fit for the future".

Planning permission was obtained for a Residential Housing Development which involved demolishing part of the existing Home and converting the remainder into two units, plus seven new build units in the grounds. The client's Project Manager was formerly the Commercial Director of one of the large building plc's.

  • Facility agreed of £1,000,000 covered 100% of development costs.
  • Bank base rate plus margin 2.5%.

Hotel and Holiday Lets

For: Purchase Country House Hotel plus a number of bungalows in the grounds.
Location: Cumbria
Amount: £1,000,000

The existing site was not being utilised to its full potential. Our client's plans included provision of conference facilities, wedding venue as well as more actively marketing the site as a holiday location.

  • A 15 year repayment facility was agreed at bank base plus margin 2%.

Residential Investment Portfolio

For: Investment Property Portfolio in North London, mix of houses and flats.
Location: North London
Amount: £1,500,000

With the rise in property values over the last 3 years, our client was eager to utilise the equity in his existing portfolio to go out and purchase more residential property.

The client's existing bank did not come up with a particularly attractive package. Sterling arranged the following:

  • Facility of £1,500,000.
  • Term - 20 years with an initial interest only period of 24 months.
  • Bank base rate plus margin 1.5%.

Refinance of Offices and Warehouses

For: Offices and warehouse in prime West London location
Location: West London
Amount: £900,000

Applicant company is involved in the design and installation of audio visual systems. Also, hire out equipment and manage live functions, involving the usage of 'state of the art' presentation equipment.

An established, expanding and highly profitable business. The key director was looking to 'tidy up' a number of borrowings and also to undertake a small property development.

Incumbent bankers were not attracted to the property development aspect.

Sterling arranged a mortgage of £900,000 on security value £1,300,000 (69%), over 15 years at bank base plus margin 1.5%. As well as delivering the client the amount of funding required, and on better terms, 'surplus' security his existing bank held was released back to the client.

Investment Property Portfolio

For: Parade of shops with self-contained flats above
Location: Finchley, North London
Amount: £1,500,000

Our client had owned the property for many years and wanted to take out some of the equity that had built up for other business ventures.

The client's existing Building Society funder was not offering overly attractive terms.

Sterling arranged a £910,000 repayment mortgage over 15 years, at bank base rate plus margin 1.5%.

Factory and Offices

For: Our client was undertaking a Management Buy Out of an established £2 million turnover manufacturing business.
Location: Portsmouth
Amount: £420,000

As part of the funding package, we arranged a stand-alone mortgage on the business' freehold factory premises.

This was ideal for the client as an Invoice Discounting facility was being provided by another funder, secured on the book debts with a Sale and Leaseback facility on the Plant & Machinery arranged with a third specialist funder.

  • The client had a range of funders, as opposed to having all his eggs in one basket.
  • The mortgage was arranged over a 15-year term, at bank base plus margin 2%.

Property Development Facility

For: Development facility to build 20 self-contained, 5-bedroom flats for the student market.
Location: Leicester
Amount: �2,000,000

Client is converting his existing factory unit into flats and also building a new block of flats on land he owns adjacent to the factory.

The property is in a prime location, opposite a major University.

The client's existing bankers were only prepared to fund the development on a phased basis. Our deal enabled the client to build out in one operation, saving considerably on build costs.

A 15 year repayment facility was agreed at bank base plus margin 2%

Purchase of Modern Factory Unit

For: Purchase of new industrial unit
Location: Northampton
Amount: £210,000

Our client had been in rented accommodation but with a rent review looming was looking to buy his own freehold unit.

The client had sufficient funds in his Personal Pension Plan to enable us to arrange a mortgage to the Trustees of the Pension Fund. A lease was then created to the client's trading business, with the rent charge covering the mortgage repayment.

This was a very tax efficient way of purchasing the property.

  • Sterling arranged a mortgage of �210,000 (70% of purchase price) over 15 years, at bank base rate plus margin 2%.

Warehouses and Offices

For: Neglected Warehouse & Office Site
Location:Ashford, Kent
Amount: £600,000

This case was a Partnership with at least 1 year's poor accounts.

One Partner had a few CCJ's, as did an associated limited company, and they had missed 2 payments in the last 12 months on their mortgage.

The property was a large, neglected warehouse and office site in poor overall condition.

Their Bank wanted an exit and were pressing them to move even though they had a property developer "in the wings" ready to pay them a premium to get the site. They only needed another 4 months but the Bank would not wait.

  • Sterling arranged a mortgage of £600,000
  • A 30-year mortgage was arranged with the first 3 years interest only, at bank base rate plus a margin of 4.5%
  • Advance was completed within 2 weeks from getting the valuation.

Travel Agent - ReMortgage

For: Travel Agent
Amount:£100,000

This client was short of cash and the accounts were poor. The Director had a judgement against him, as did the Limited Company together with a £40,000 default. The company wanted to re-mortgage their premises to pay off the overdraft and existing mortgage due to pressure from the Bank.

  • Sterling arranged a mortgage of 75% LTV, advancing £100,000 over 30 years at bank base plus a margin of 5.5%

  • Client is paying less overall than with their High Street bank as penalties etc had increased the cost

Property Development

For:Property Developer
Location:North Wales
Amount:£900,000

Property Developer with limited experience without funds to inject into a development of 8 houses in North Wales. In addition he had 12 County Court Judgements, all unpaid.

  • Sterling arranged a mortgage of £900,000 with no cash input from him at 1.25% per month with the interest rolling up until the sales start to come in

Property Development - Essex

For: Property Development
Location: Essex
Amount: £500k

Our Client was retired, however, he wanted to start a property development in Essex. He did not have a bad credit history, but needed a much higher Loan To Value than a 'High Street Bank' would give.

Sterling found him a deal with a very small cash input at base plus 3% with the interest rolled up until sales started to come in.

Bed and Breakfast

For:Bed and Breakfast Accommodation
Location:Mablethorpe
Amount:£215,000

Clients wanted to buy Bed and Breakfast accommodation in Mablethorpe, even though they did not have any experience in this sector and had been turned down by the 'High Street Banks'.

The family home was mortgaged by their daughter and this money was used as a deposit to buy the B & B.

Sterling then arranged a £215,000 mortgage which represented 85% LTV at base rate plus 5%, over a period of 30 years.

Refinance Commercial Premises

For: Refinance Commercial Premises
Location: Hull
Amount: £220,000

The Client's High Street Bank wanted exit and there were no accounts.

Sterling arranged a 60% LTV mortgage of �220,000 over a period of 30 years with a margin of 3.25%.

Warehouse, Distribution Centre with Offices

For: Warehouse & Distribution Centre with Offices
Location: West Sussex
Amount: £970,000

The Client's Bank wanted an exist and the accounts showed a trading loss of £200,000.

Sterling arranged a mortgage of £970,000 over a period of 30 years with a margin of 2.25%, the first 3 years being interest only.

Lake and Land Refinance

For: Refinance Land & Lake
Location: North Wales
Amount: £405,000

Client was seeking funds to finance the use of specialist farm products. However, there were no accounts and a large CCJ was registered.

Sterling arranged a 65% LTV mortgage of £405,000 over a period of 30 years with a margin of 2.5% with the first 3 years being interest only.

Refinance Owner Occupier Shop

For: Owner Occupier Shop
Location: Worcester
Amount: £226,000

The client's own Bank were not able to provide the additional funds the client was requesting due to no up to date accounting information and recent detrimental information being registered.

We were able to deliver the full amount requested with new lender fully aware of the recent CCJ's and with the benefit of an interest only option, his overall monthly payments were in line with his previous mortgage costs prior to the further advance.

Sterling arranged a mortgage of £226,000 over a period of 30 years; LTV being 80%; Margin 4.95%; 3 years Interest Only.

Refinance Semi-Commercial Property

For: Re-finance Semi-commercial Property
Location: London
Amount: £210,000

The client had recently fallen into arrears with his current bank and was being asked to find an alternative funder.

Despite the arrears, we were able to raise sufficient funds to clear the bank and provide some additional funding to consolidate some expensive personal debt. This allowed the client to find a new transactional banker for his day-to-day banking and as there was no borrowing requirement, this was on a free banking basis allowing him further savings.

Sterling were able to arrange:

  • £210,000 mortgage
  • 25 year Term
  • LTV - 80%
  • Margin - 4.5%

To Summarise...

Apart from arranging Commercial Mortgages we can arrange Property Finance for any specific purpose, such as: refinance / rebanking, development finance, short term bridging loans and buy to let or as part of a larger funding requirement such as a management buy out or a corporate acquisition.