Commercial property finance for a large financial services company

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THE SCENARIO

I was recently able to help a London based business secure commercial property finance. My client was renting a large premises in London’s square mile. As a financial services company with a worldwide client base, this location was important to their business—but this prestigious location was reflected in the huge amount of money that they were sinking into rent each year.

They had been considering purchasing a commercial property from which to operate as an owner-occupier for some time, but they had serious concerns about doing this. Logistically, moving premises would be a time-consuming and costly process. They also knew that to purchase a property in their preferred location, they would require a large capital deposit.

Lenders can also be reticent to lend in this area, as the value of properties here does not necessarily reflect physical or quantifiable factors such as size, but rather the prestige of the location. Such properties are therefore at risk of generating lower yields in the event of a recession.

My client’s property adviser knew they were unsure how to proceed on this issue, and recommended they speak with myself at Enness. I therefore took on this case knowing they would need a solid motivation to commit to the move, and fortunately, I was able to provide this for them.

OUR SOLUTION 

Due to Enness’ extensive contact network, I was able to help my client locate a fantastic property. We can support clients through every stage of their commercial finance; in this case, by using our contacts to access property which is not widely available on the public market.

The property in question was worth £25million. I secured my clients a loan at a rate of 1.8% over the Bank of England’s base rate with a loan to value of 72% meaning my client would benefit from a very competitively priced rate but still keeping a good balance between the LTV and the rate.

This was an excellent find at a good rate, but the property itself wasn’t the only benefit. Although it did require a large deposit upfront, this property was so large that my client only required 40% of the space, meaning that the other 60% could be rented out to other companies to generate an additional revenue stream.

Leasing out the other 60% would also cover the mortgage payments, meaning my client could service their debt purely from their rental income, regardless of their company revenue. This was a fantastic result, and shows how Enness Commercial can use our extensive panel of lenders and industry contacts to find commercial property finance solutions with a multitude of benefits.