Our client, a UK national and Hong Kong resident, approached us to provide a refinance for a high-value property in north London.
The property had an existing mortgage which was soon to expire and the client wanted more time to sell the property than was available. Rather than sell the property quickly and under pressure he asked us to refinance the existing lender and provide a facility until the property was sold.
The loan required, once interest and fees were added, took the loan beyond our usual loan-to-value limits. We were keen to help and more than prepared to find a solution given the quality of both the property and the borrower.
We offered the following terms based on a £10m expected valuation:
- 75% loan to value in 2 parts
- Senior loan of £6,250,000
- Junior loan of £1,250,000
- Total loan – £7,500,000
- 12-month term
- Interest serviced quarterly
The property was subsequently down-valued to £9m so we restructured our loan as follows:
- Loan to value in 2 parts
- Senior loan of £5,625,000
- Junior loan of £1,875,000
- Total – loan £7,500,000
- 12-month term
- Interest serviced quarterly.
A 10% reduction in valuation would normally be fatal to any loan like this however, based on the borrower’s profile and market commentary around sale prospects we were still very comfortable to help and our flexible pools of capital allowed us to create a unique and high loan-to-value solution. The key to this transaction was the client having a substantial asset and liability statement, with assets in international jurisdictions. Due to our ability to structure loans cross-border and use international security, we were able to structure a solution that de-risked the LTV on the property.
We used our principle funding line for the senior loan, the junior loan was funded partly by our own capital and partly from high net-worth funders who appreciated the risk-adjusted return available.