Key would like to showcase the below Commercial Mortgage deal which we just recently secured!
- Our client was a relatively young business in terms of a limited company, with only 2 years fully filed accounts
- The directors were experienced in the industry and the business had grown rapidly over the last 3 years. They were looking to expand further and purchase premises in order to achieve this.
- The property and site they wanted to purchase was formerly used as a children’s quad bike centre and had the associated planning consent for leisure purposes as opposed to commercial.
- The property is located next to an industrial estate and although it has its own access via an unmade track, the main access is via the industrial estate itself. The estate grants an access by way of a 99 year lease which formed part of the purchase.
- The client was going to take a small portion of the main building for their own office and rent out the two other offices to generate additional income. The client had a tenant who had agreed to sign the lease which was to be finalised prior to drawdown of the loan.
- The agreed purchase price was £210,000 and our client was seeking 70% in order to allow them to purchase and undertake some refurbishment on the site.
So how did we add value?
- The above may sound like a simple deal. Although the company was profitable due to the young nature of the business it is fair to say that some lenders would have wanted projections and could have been put off by a business which was unproven.
- In respect of the proposed site, there was uncertainty around the planning and whether this could be changed along with access to the site.
- With our strong relationship with our Business Development Manager we were able to provide comfort to the lender as to the affordability from both the client and respective tenant, and that the risk of the site access and planning should be made a condition of the loan.
- We successfully secured 70% LTV on a 25 year term, with an interest margin of 3.4% over base rate.