£1.2M refurb loan to create apartments from commercial property

Situation: We were approached by an experienced property developer borrower, who had previously worked as a Quantity Surveyor for a large house building company before starting SME projects for themselves.

They had purchased a commercial property, previously used as a bank, via a bridge using one of his investment properties to raise 100% of the purchase price. The original bridge was to give the developer time to explore planning to convert to residential.

Target: The developer had obtained planning permission to convert the commercial property into 4 apartments.

Catalyst provided a purchase and refurbishment loan, lifting out the original purchase bridge, as well as providing additional funds on day 1 to get the works underway along with 100% of works funded in arrears.

Action: We were able to refinance the existing bridge across the commercial and additional security, requiring no additional cash input or security from the borrower. In fact, we were able to release additional funds on day 1 of the loan to cover some of the borrower’s expenses, and to get the build underway.

The loan had some complexities that our Credit Team were able to become comfortable with, such as one of the additional securities was situated next to a petrol station and that removal of the old vault had been taken into account with the build cost. At Catalyst, we understand that development projects often present complexities in planning and building, and we are able to cater for these.

Result: We provided a £1,200,000 loan over 12 months at 0.85% fixed per month; of this, £600,000 was to redeem their existing lender, £100k extra on day 1 to cover costs/get works underway, with the rest of the loan provided as drawdowns funded in arrears to finish the conversion.