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Deal News -
Providing funding for an international property portfolio
This case study examines a recent financing deal where a client approached us with a specific need to refinance existing debt. Despite having a healthy loan-to-value ratio, the client encountered obstacles with their current lender because of the cross-border financial structures of their existing lending arrangements. This situation led them to search for a more flexible and accommodating solution.
Client Background
Our client, a successful entrepreneur, sought a £9m loan to refinance existing debt held with another lender.
Asset Portfolio
The asset portfolio holds a value of £18.3m and maintains a solid loan-to-value (LTV) ratio of 48%. It comprises six freehold and long leasehold properties, with 40 income-producing units, in prime areas across central London and the home counties.
The Key Challenge
A unique aspect of this refinancing arrangement is the presence of Isle of Man entities housing the assets.
Chris Smith, Commercial Banker at Arbuthnot Latham, said:
“When our client wanted to refinance their debt, they found themselves in a tough spot. Their longtime lender, no longer interested in financing international deals, including those involving assets held through Isle of Man structures, presented an obstacle.”
The Deal
Despite the complexity of managing offshore components, our dedicated real estate team demonstrated the agility and expertise required to meet our client’s diverse needs, offering them a £9 million loan, which included financing the arrangement fee.
- Serviceability: We carefully assessed various loan options for lending at 49% LTV — both variable and fixed. After thorough consideration, we chose the fixed option, aligning it with the client's best interests.
- Recovery Loan Scheme (RLS): We utilised the RLS to offset capital allocation, applying it to a small proportion of the total debt.
- Financing the Arrangement Fee: As requested by the client, we incorporated the arrangement fee into the approved loan amount.
- UK Special Purpose Vehicle (SPV): The client established a new UK SPV as the borrowing entity to allow us to streamline the refinancing process while adhering to regulatory standards and compliance.
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This communication should be considered a marketing communication. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is for information purposes only and does not constitute advice, a solicitation, recommendation or an offer to buy or sell any security or other investment or banking product or service. You should seek professional advice before making any investment decision. The value of investments, and the income from them can fall as well as rise, and may be affected by exchange rate fluctuations. Investors could get back less than they invest. Past performance is not a reliable indicator of future results. The tax treatment of investments depends upon individual circumstances and may be subject to change.
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