Bridging Loan Case Study – 100% of Purchase Price on a BMV Residential Portfolio acquisition.

An existing client had agreed to purchase a Residential investment portfolio in his area, from a Landlord who was retiring, and wanted to sell the whole portfolio to one buyer. Our client knew that he had agreed a good discount off the Open Market Value, and as such we had a very strong case for a “Below Market Value” Bridging loan.

The portfolio included a mix of houses & flats in the North East, with all properties being decent quality rental stock and the clients own expected values sat nicely within the local area and recent comparable-sales evidence.

The properties were also spread well enough for lenders not to have any concentrated exposure concerns. As such, the chosen lender was happy to work on an “aggregate” value.

Given the client was very keen to get the portfolio acquired quickly and knowing that his best chance of getting maximum leverage was by using a Bridging loan, we went about sourcing quotes from the most appropriate Below Market Value Bridging lenders.

The portfolio purchase price was agreed at £1,500,000 but the client expected an aggregate value of £2,150,000.

We sourced a quote giving 75% LTV which provided a gross loan figure of £1,612,500. Interest was to be paid monthly form the rental income which the portfolio generated, and after deducting the lenders Arrangement Fee this gave a “net” loan amount of £1,500,000 and therefore 100% of purchase price.

The client agreed a share purchase of the SPV which the properties sat in, so he didn’t have to cover the SDLT which he would have been exposed to if purchasing the properties in his own company.

The interest rate was 0.85% pcm, with No Exit Fees applicable (subject to a 3 months’ minimum term).

Some of the properties qualified for AVM’s however some required Desktop valuations but valuation fees were kept to a minimum.

Client intends to refinance the acquisition Bridge on to a long-term facility after 6 months of ownership, to allow access to the wider commercial mortgage marketplace.

A very satisfying outcome for the client, and one which Positive Commercial Finance as  Broker were extremely pleased with.