Converting commercial buildings into residential units is a growing trend, but when those properties are Grade II listed, it takes specialist funding and experience. That’s exactly what an overseas developer needed when planning to transform three serviced offices in Surrey into high-end townhouses.
The Challenges
1. Grade II listed building conversion
Converting a Grade II listed building is challenging due to the strict regulations aimed at preserving historical features. These regulations limit what changes can be made, often leading to extra costs and delays, which in turn increases the risk for lenders.
2. Planning amendments
Midway through the project, the borrower submitted amendments to the existing planning application, triggering a judicial review period.
3. Request to take equity out of the deal
The borrower, an overseas investor with no personal cash equity, relying solely on third-party funds, requested cash from development drawdowns by acting as the project manager and counting management fees as equity. This unconventional approach is typically rejected by most lenders.
The Solution
- Lendhub’s experience with listed properties
With a proven track record of financing listed buildings, our extensive experience in listed developments allowed us to navigate these complexities with confidence.
- Last-minute terms adjustment
Amended our lending terms late in the process to reflect updated planning, giving the borrower full benefit of the new consent without adding extra conditions.
- Backed a strong deal
Agreed to release management fees due to the borrower’s experience, strong location, and a scheme we were confident backing.
The Outcome
By structuring a bespoke £1.8m facility at 75% NET day one and 70% LTGDV, we enabled the borrower to unlock value from a £965k asset and progress confidently toward a projected £2.575m GDV. With our flexible approach and deep expertise in complex listed developments, Lendhub helped transform a planning and funding challenge into a high-potential residential scheme.
