Leverage secured

65% LTC

Saving (net of fees)

£2.6 million

Lender

US PE credit fund

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A Permitted Rights Scheme development in East Croydon of 258 high-spec residential units.

There were no pre-sales but significant interest from housing associations assisted in securing attractive terms.

The deal

Assets

  • GDV £106m

Security

  • First charge on development site and 258 units

Income

  • N/A (development funding)

Requirements

  • £58 million, 65% LTC
  • Specialist provider
  • Interest roll-up

Challenges

  • No pre-sales
  • Competitive market with plenty of new residential supply

Facility Secured

  • 24 month facility
  • 65% LTC, interest roll-up
  • Highly competitive terms

Summary

A large privately owned development and asset management group were performing a Permitted Rights development in East Croydon. The scheme involved the conversion of a 20 storey 1960s office tower into 258 modern, high-spec residential units. While there were no pre-sales, there was significant interest for units from housing associations.

The client utilised us to benchmark the terms of its existing lending relationship. In addition to full underwriting and credit analysis, we conducted drone footage of the asset to show credit providers the physical attributes of the building, its surrounding locality and nearby competitor offering.

The team obtained significantly improved terms from a US PE credit fund, including a 140 bps reduction in the margin, a 100 bps saving in the arrangement fee, 75 bps reduction in the no utilisation fee and a 150 bps reduction in the exit fee. This equated to a £2.6m saving, net of fees. Aside from the better pricing, the new lender was able to transact more expediently thereby minimising transaction risk.

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Colliers International Structured Finance
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+44 1534 767 600
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