Bridging - adding value at the outset

Posted by Icom on August 16, 2017

The Situation

An experienced investor purchased a leasehold property in Central London with the aim of carrying out extensive refurbishments and acquiring the freehold of the property. Upon negotiating the acquisition of the freehold, they sought planning permission to improve the property, including lowering and extending the existing basement.

The Solution

  • Property value (post freehold acquisition): £5,500,000
  • Final property value valuation post completion of renovation: £7,250,000
  • Day one fund release: £2,629,900
  • Stage 2 release: £235,000
  • Stage 3 release: £125,000
  • Stage 4 release: £110,000
  • Interest rate: 0.9% pm     
  • Facility fee: 2%

The customer’s broker requested help arranging funding for the refurbishment and freehold purchase costs. A deal was structured to allow the client to release 100% of the acquisition cost, plus monies towards the refurbishment upon completion. A drawdown schedule was put in place to release funds throughout the refurbishment, allowing the client to successfully fund and complete works on the property.