Our client was an experienced real estate investor. He was looking to arrange a facility to purchase various commercial investment properties through his Self-Invested Personal Pension (SIPP). The properties would be purchased in the name of a Trust. The client wanted the flexibility to purchase varied commercial units in locations throughout the UK.
We were able to secure a facility of up to £10m for our client. Offers totalling £6.4m were secured to purchase 4 commercial freeholds with a combined value of £12.8m.
The first difficulty that the client faced was that many banks cannot lend to a Trust.
In addition, the client was looking to buy properties in locations throughout the UK. The client’s current private bank was focused on local relationships and as such could only lend in Greater London.
The client identified sites including large scale retail units and leisure units in various sectors. Many banks were not comfortable lending on all the targeted sites (especially considering the challenges currently faced by the retail sector).
Key to securing heads of terms for the full facility was to build a business case based on the client’s excellent track record of investments.
We secured a deal with one of the major clearing banks that was able to offer funding across all sectors. Some of the purchases were consolidated to strengthen the covenant of each individual transaction.
A relationship was established where we were, before full submission, able to obtain Heads of Terms with commentary from the bank’s surveyors as to both the market rent and vacant possession value of each unit. This gave the client further information for their due diligence of each purchase.
“Key to securing heads of terms for the full facility was to build a business case based on the client’s excellent track record of investments.”
The client now has an established relationship with a bank that can finance a varied and diverse portfolio of commercial properties.
The composite rate of borrowing secured across the offers was just 2.6% over BBR. We negotiated a reduced arrangement fee of 1.25% (from 1.5%). The clients funding line remains in place for the swift purchase of future commercial properties.
Specialist Mortgage Solutions Ltd
29 Park Circus