Our client was a property developer who followed a build-to-rent portfolio model. He was looking to refinance a portfolio of 23 properties with a value of £15m. The portfolio consists of blocks of flats both on individual leases and blocks held under one freehold title. The client also operates a large 17-bedroom HMO property.
The borrowing was secured by using a combination of a £5m loan with a specialist real estate bank and £6m of borrowing with three specialist mainstream banks. By securing a deal with multiple lenders the client was able secure 70% borrowing on a lower all-in fixed rate than he would have secured via a single deal with a real estate / commercial loan.
The large HMO property is outside of the appetite of most banks except specialist lenders on very high interest rates. We secured a deal with a specialist real estate bank on their government backed green loan products. These products were reserved for properties with a high Energy Performance rating (or those that can be improved to a high rating).
The rest of the portfolio was financed via individual mortgages with mainstream lenders and there were many issues to consider.
As brokers we had to consider the lenders individual stress tests and portfolio tests. Their rules surrounding exposure – both within individual blocks and postcodes.
To secure the lowest possible rates, the applicant had to create individual leases on a newly build property. We had to ensure that the lenders were comfortable lending on a new title (without waiting for 6 months).
Finally, we then had to coordinate the applications with multiple underwriters, valuers, and solicitors.
After months of work to tie the various deals together the client secured total lending of approximately £11.1m at a composite 5-year fixed rate less than 3% with a 0.7% arrangement fee. These terms are far better then he would have been able to secure via a single lender. All in the client has raised £3.2m of capital to invest in future projects.