United Trust Bank’s (UTB) Structured Property Finance (SPF) team is assisting an experienced real estate investor with a £1.5m planning gain facility on a piece of mixed-use land on the outskirts of Greater London.
The customer has owned the 10-acre site for over three years and as they were reaching the end of their existing finance term, and with the funding now falling outside of the original lender’s current credit appetite, the customer wished to refinance the facility with a new lender.
A B8 storage business is operated on part of the land as well as there being a tenanted residential property and several acres of paddock. The customer is yet to obtain planning consent for a residential development, but a professional feasibility study has indicated that there is a good likelihood an acceptable scheme will be agreed with the local authority. Once planning has been secured, the site can be sold at a substantial profit to the customer. However, the Bank also had the comfort that the customer had significant equity in the transaction and an alternative exit existed in the sale of the storage business land if necessary.
Although the property was not fully income producing on drawdown with the lease on the storage business still to be finalised, UTB was able to proceed with the loan by holding 12 month’s interest on account to cover potential shortfalls.
| Borrower | ‘Value add’ Investor-Developer |
| Amount | £1.5 million |
| Loan Type | Planning gain facility – refinance |
| Location | South |
| LTV | 50% |
| Project Type | • Refinance of existing funding • 10 acre site with potential for residential use • Currently comprises storage business, agricultural land and a single let residential property |
| Special Features | • New to Bank customer • Site not fully income producing so 12 months interest held on account to mitigate • Alternative exit should planning application be unsuccessful • 24-month term |