A seasoned developer approached us to refinance an existing loan and fund the ambitious conversion of a commercial property in Poole. Their plan involved transforming the property into a mixed-use asset comprising a ground floor retail unit, a Sui Generis HMO, a one-bedroom garden flat, and a detached house to the rear.
The borrower, backed by a guarantor with extensive development experience across 96 completed projects, needed a facility that could accommodate the complexity of the conversion whilst providing certainty of exit.
Lendhub provided a £893k heavy refurbishment facility at 69% LTV and69% LTGDV on a 12 month term.
Key Challenges and Solutions
Multifaceted Heavy Refurbishment
This heavy refurbishment comprises four different components, requiring significant structural works to the property. These include:
- Alterations to the ground floor commercial unit
- Planning permission for the extension and conversion of the upper floors into a 7-bed HMO
- Planning for the construction of a 1-bed flat
- Change of use to the rear two-storey building from commercial to residential for a 2-bed house.
Section 106 Requirements
The planning approval came with Section 106 obligations and associated legal costs totalling approximately £7,500.
Sophia Panteli, Credit Analyst, reviewed the planning documentation in detail, confirming all contributions were accounted for within the project costs and reflected in the valuation.
*Section 106 obligations are used to offset the negative impacts of building works. They are agreed upon by the developers and local planning authorities.
Mixed-Use Exit Strategy
Alongside the planning permission required for the four distinct asset classes, the exit strategy required careful consideration. We stress-tested the refinance route against semi-commercial mortgage guidelines and ensured this was a viable route for the borrower.
The Outcome
The borrower secured a £893k facility to refinance their existing bridge and fund the commercial to mixed-use conversion. Once the works complete, our borrower will have a ground floor retail unit, a 7-bed HMO, a 1-bed flat, and a 2-bed house ready to refinance against. With a GDV of £1.3m, the exit strategy is well supported.
This deal was delivered by Jack Bruce, Theo Goodman and Sophia Panteli.
