£8 million mixed-use property portfolio refinance for offshore corporate trust

THE SCENARIO

In our experience of securing commercial mortgages, one thing has become abundantly clear: commercial property finance is complex property finance. No matter the client, the financial requirements for commercial scenarios will always be unique to the individual case. As such, it can be extremely frustrating for commercial clients to repeatedly have to present themselves and their backgrounds to different lenders to gain access to the services they need as an investor, business owner or a company – and that’s just the start of it. This particular case was no different. The client in question was an offshore corporate trust looking to refinance a large property portfolio worth £11million. The equity released from the portfolio would go towards major repair and refurbishment work on the properties as they were in terribly poor condition.

CLIENT SCENARIO

As mentioned, we were applying for a loan on behalf of an offshore corporate trust that owned a substantial property portfolio consisting of 41 individual addresses. The portfolio was mixed-use, a combination of residential HMO properties and freehold commercial units valued at £11 million. The majority of the properties were in extremely poor condition and required funding in order to stop them from deteriorating any further. The client wished to refinance the mixed-use portfolio to release equity for the repair and restoration of the properties. 

The headline client scenario was as follows:-

Client: Offshore corporate trust with large UK property portfolio 

Property Portfolio Value: £11 million

Portfolio Details: Mixed-use portfolio (commercial and residential) of 41 individual addresses

Property Ownership: Complicated ownership structure: held within the aforementioned trust as well as a BVI company

Existing Loan: £5.6 million

LTV Required: 65% LTV

Mortgage Type: Property portfolio refinance

Despite the trust’s standing and the value of the portfolio, there were a few areas of contention within this case that would make it difficult to work with more mainstream lenders. Firstly, the properties were owned in a complicated structure, involving the trust itself and a British Virgin Islands (BVI) company. Secondly was the simple fact that the portfolio consisted of so many individual addresses, which made the case a difficult and complex one to process. 

ISSUES TO ADDRESS

As highlighted above, there were multiple elements to this scenario which meant the majority of mainstream lenders would not consider the case. The scenario was also further complicated by the fact that the Ultimate Beneficiary Owner (UBO) of the trust and BVI did not want to provide a Personal Guarantee (PG). When applying for a loan on behalf of a company, most banks will require a PG from the UBO in the event that the Trust/company is unable to pay the debt, the PG will act as a guarantor and continue the loan payments. It soon became clear the only course of action to get the best outcome for the client was to approach a private offshore bank that would take a holistic approach to the client’s situation.

To summarise, the key issues in need of address were:

Ownership Structure: Complicated mix of offshore trust and BVI company. Many lenders are uncomfortable with properties held within these structures.

Portfolio Complexity: Portfolio was mixed-use and consisted of 41 individual addresses which made it very difficult to process.

Personal Guarantee: The UBO of the Trust and BVI did not want to provide a PG of any kind.

 

THE SOLUTION

Enness is an independent mortgage brokerage and therefore we are able to speak to more than 300 UK and international lenders. The client’s situation and requirements, in this case, dictated that we needed to look outside of mainstream lending realms to satisfy the needs of the company. 

In order to overcome the hurdles presented, we needed to approach an offshore bank that understood the comoany’s structure and would take an aggregated view of the client’s circumstances. The bank we secured terms with recognised that the portfolio was being well managed by the trustees and that lending the extra monies would add value to their security.

Funding Partner: Offshore private bank

Property Portfolio Value: £11 million

Mortgage Funding: £8 million

LTV Ratio: 72%

Mortgage Duration: 5 years

Mortgage Rate: 1 Month LIBOR + 3.90% per annum

Due to our negotiations, the client now has a relationship with an offshore bank who is more suited to their general property needs moving forward and is able to understand the nature of their business.

 

WHAT CAN ENNESS DO FOR YOU?

Enness is proud to have built up strong working relationships with trusts and trustees around the world. This has allowed us to expand our reach even beyond our growing network of international offices which now cover London, Monaco, Dubai, Jersey, and Ibiza. Our expert advisors have both local and international experience on property regulations and the most appropriate funding vehicles. This ensures we know which private banks and advisers to approach for particular scenarios, saving valuable time.

If you find yourself in a similar situation to the client in this case study we would welcome the opportunity to chat with you. A no-obligation discussion regarding your specific scenario would allow us to offer suggestions, advice, and solutions going forward. As we have access to more than 300 worldwide lenders we are able to secure extremely competitive quotes for clients. This allows us to put together a number of options using real-time rates which allow you to compare and contrast not only short-term cash flow but also short, medium and long-term liabilities. Sculpting a funding arrangement around your specific scenario can be challenging but ultimately extremely rewarding.

 

 

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