Our customer was a former negotiator and manager for a major housing association.
As such he had the appropriate knowledge and experience to be a successful property developer but limited personal resources. He approached us to fund his first development project, being the construction of a new apartment block in a northern town very close to the town centre. Our original loan was based on 60% of the projected sales value of the development, but after we learned that the customer was seeking an equity provider to finance the balance of the costs, we subsequently stepped in to fund the equity. This resulted in the Bank financing 100% of the costs which saw our overall commitment rise to 72% of sales value.
The completed development was sold very quickly in its entirety for £1.2m gross, yielding a very healthy profit to the customer. As a follow-on project the customer has purchased a former motor repair site in a very attractive rural village location in West Yorkshire where planning consent has been obtained for the demolition of the garage and the development of seven mews cottages. Having been delighted with our customer’s management of the first project we offered to fund 100% of the costs for the land acquisition, building works and professional fees. This time our commitment is 77% of the projected sales value.
Loan: £1.5 million
Loan to value: 77%