AREA: North East England
AMOUNT RAISED: £1.45m
PRODUCT USED: Mezzanine finance
In the face of unprecedented challenges brought on by the COVID-19 pandemic, property developers found themselves grappling with soaring construction costs and extended lead times. This case study showcases how Bridging Finance London’s swift action and innovative financing solutions turned a potentially disastrous situation into a profitable venture for both the developer and investors.
Client Scenario
An experienced developer, operating through a UK SPV, had embarked on an ambitious project to convert a mill in North East England into 21 luxury apartments. The project was well underway, supported by a first-charge development loan we had previously arranged. However, as the pandemic unfolded, the developer faced an unexpected hurdle: construction costs had doubled in some areas, creating a significant funding shortfall.
Funding Solution
Recognising the urgency of the situation, our team sprang into action. We structured a mezzanine loan of £1,450,000, with £350,000 earmarked specifically to cover the unforeseen cost increases. The loan terms were carefully aligned with the existing senior development finance to ensure seamless integration.
Key features of the funding solution included:
- Loan amount: £1,450,000
- Product type: Mezzanine loan
- Interest rate: 1.5% per calendar month
- Timeframe: Arranged in just 3 days
Final Outcome
Thanks to the swift injection of additional capital, the developer successfully completed the mill conversion project. The 21 luxury apartments were sold to investors, who benefited from an attractive 10% per annum yield. This outcome not only saved the project from potential failure but also created a profitable investment opportunity in a challenging market environment.
This case study highlights the importance of agility and expertise in property finance, especially during unpredictable times. By leveraging our extensive network of lenders and deep understanding of complex financing structures, we were able to:
- Arrange £1.45 million in mezzanine financing within just 3 days
- Rescue a significant development project from COVID-related cost overruns
- Create a profitable investment opportunity with a 10% yield for end investors
Our ability to quickly assess the situation, structure an appropriate financing solution, and execute it rapidly demonstrates why Bridging Finance London is a trusted partner for developers and investors alike, particularly in challenging market conditions.
