Location: Wandsworth, London

Loan Amount: £1,600,000

Finance Category: Commercial Property Finance

The Story

Fox Davidson Commercial Finance were asked to finance a leasehold property with B1 office use in SW18. The property was currently a shell and would allow our client to expand his business to the new premises.

Our client’s business involved a non-UK resident director that would not sign any personal guarantees. The lending would be made to an SPV Ltd company and the client’s business would occupy the premises.

The client required 100% funding, a VAT loan and a period of interest-only for the duration of the fit-out.

The Challenge

We first took the enquiry in 2016 and discussed terms with the client and agreed to work together. It was not until 2017 that a suitable property was found.

One of the unusual things about this case was that the client’s business required the premises, but the client wanted to own the property personally through his own separate SPV limited company. The SPV owned several commercial rental properties already and would purchase the new premises and rent it to the trading business.

Most commercial mortgage lenders would treat this as an owner-occupier loan as ultimately is it the same client buying the commercial property and the same client then occupying it.

Following meetings with several traditional commercial lenders they could not get around the fact that they could not have a charge across the trading business (which would involve guarantees from the non-resident director).

The traditional banks also questioned the market rent and valuation of the property. We required a commercial lender with a positive outlook, one that would let professional surveyors be the judge of market rent and property value.

The lending of 100% would be made possible by utilising the existing business premises which was being retained and another buy to let property already held in the name of the SPV.

The lender agreed to lend only with guarantees from the directors of the SPV limited company.

The Solution

Luckily, there are many new banks that have come to play in the commercial lending arena over the last 5 years, making the commercial market place much more competitive.

Using our vast contacts of lenders in London, Fox Davidson secured a commercial mortgage of £1.6m at 3% over the bank of England base rate. We agreed an interest-only period for 6 months to allow for the fit-out and a loan for the VAT which would be claimed back in due course.

The reason clients come to us is because they often have complex situations, or simply want to know they are getting the best terms. On the face of it, this was a very simple commercial loan that could be financed by any of the major lenders, the only issue being that the client was not prepared to provide guarantees from the trading company (and this does not tick the boxes of the major commercial lenders).

Finding a solution for a client is always satisfying, but even more so where other lenders had questioned that this could work at all and even cast doubt on the property sale price and rental income figures.

This client is now moving the banking of their multi-million pound turnover business to the new lender and the relationship will be good for both the lender and the client’s business.

100% Property Finance Loans

Fox Davidson are a specialist commercial property finance broker in London. Funding is available from £100,000 to £200 million.

For more information on commercial property finance in the UK, please email enquiry@foxdavidson.co.uk or call us on 0117 989 7950.