Student accommodation commercial refinance on an interest only basis

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THE SCENARIO

I recently worked with a client whose family owned a property business specialising in the development of student accommodation. Their goal was to secure student accommodation commercial refinance.

My client was looking to release equity in order to continue the growth of the family’s portfolio by developing further student accommodation projects. They were working with an existing lender who was willing to lend up to 60% loan to value (LTV) but my client needed to release further cash for other development projects.

My client had three assets they wished to release equity from; all of which were student accommodation properties located in Portsmouth, valued in total at £2.5million.

Once I began looking into the case, a challenge presented itself in that they were looking to sell one of the existing properties in the next six months, and add a further student accommodation property to their portfolio. This additional project was currently under construction and would be added once the build was complete and students were in place.

However, I knew of a lender who would be willing to take an overall view of the client’s entire portfolio and future intentions for their current developments. A further attraction was their ability to create a bespoke product suiting exactly what the client needed.

This lender offered my clients high gearing at 70% LTV, giving my client the flexibility of changing a property for another in the portfolio. The lender initially required a 3% early repayment charge for the flexibility of changing property on the loan however, I was able to negotiate with the lender and managed to agree a lower early repayment charge of 1%.

The lender agreed to take a first charge over the three student accommodation assets, offering a gross loan of £1.75million at a rate of 4.6% over 10 years on an interest only basis.

It’s Enness’ ability to create a bespoke solution for clients’ situations that sets us apart. If you are in a similar situation and looking for student accommodation commercial refinance, get in touch with our specialist brokers today to discuss your options.