An ambitious young developer agreed to purchase a disused and largely derelict 4 storey property in West Yorkshire. The block consisted of retail units on the ground floor and basement with 2 floors of offices above. The property had outline planning consent for conversion to residential use comprising 17 flats which were to be a mixture of 1 and 2 bedroom units.
An indication of strong pre-sales supported the project and a loan of £875k was agreed on a project valued at £1.4m. The Loan to Value was 64% at the outset and during the term of the conversion this rose to 67% in support of some extra costs. This represented 88% of total costs.
The project was well managed by the development team despite an early problem with the nominated contractor who went insolvent. The Bank accommodated this difficulty and supported the developer in employing a new contractor. The sale of all units was completed on schedule including all the initial pre-sales.
Loan: £0.9 million
Loan to cost: 90%
Loan to value: 67%