Refinance for equity release across a client’s £90million property portfolio

Key figures:

• Four properties with combined value of £90million
• Remortgage of £67.5million
• 75% loan to value (LTV)
• 20% of loan placed as assets under management (AUM)
• 1.5% plus 3-month LIBOR
• 5-year interest only term

The client:

My client came to me following a recommendation from a friend of his, a former client of mine. He was an American originally but resided in the UK. His income came solely from the rent that his properties generated.

The property:

My client owned four London properties, each of which are considered ‘prime’ as they are valued at over £20million each. The combined total of the properties was £90million.

What were they looking for?

He was looking to release equity across his whole property portfolio in order to fund future investments and pay off some debt that he had accrued.

Why was it difficult?

A lot of lenders in the UK can shy away from dealing with American clients. This is due to difficulties imposed by the USA’s Inland Revenue Service (IRS). The IRS has the power to freeze Americans’ assets outside of the USA, which is a cause for concern for foreign lenders.

Furthermore, as all the properties were considered ‘prime’, most lenders would only offer a maximum of 50% loan to value (LTV) which was not enough to cover my client’s debt and future plans.

What was the process?

Finding a lender that would offer higher than 50% LTV was going to be a struggle. However, following some careful research, I approached a well-known high street lender’s private banking arm who were able to consider my client’s case.

Enness’ unique access to such a wide range of lenders eliminates a lot of the difficulty from the research and negotiation stages of the mortgage process.

The solution:

The bank in question offered my client a 75% LTV across his four properties (£67.5million). This was an incredible achievement considering the huge combined value of the properties. 20% of this corporate loan would be placed with the bank as assets under management (AUM) as a bond.

This deal was offered at a rate of 1.5% plus 3-month LIBOR over a 5-year interest-only term and allowed for enough equity to be released to cover his debt and for future investments.