Real Estate Advisory completes £47.2m refinance and capex facility for City office refurbishment

The refinance tranche drew down just five weeks after credit approval, keeping a significant refurbishment programme on track for a longstanding client.

Background

The client acquired a 58,000 sq ft office building in the City using an acquisition bridge arranged by FRP. Since the acquisition, planning consent has been achieved for a new top floor. The client needed to refinance the bridge at pace and fund a significant capital expenditure programme – a full internal refurbishment and the new floor, targeting BREEAM Excellent – without losing momentum on the business plan.The transaction was led by Edward Horn-Smith, Partner, and Philip Kay, Director. With speed central to the brief, the team partnered with a specialist debt fund and worked directly with its principal to keep the credit process and execution moving.

Key features of the facility include:

• A £47.2m facility at 78% loan to cost (LTC) and 65% loan to gross development value (LTGDV)
• Drawdown of the refinance tranche only five weeks after credit approval
• Elements of the development tranche following the refinance, with the lender taking a practical approach to accommodate the speed required
• A commercial approach to the more complex points, particularly those relating to the top floor addition
• A margin that steps down once the building is fully let

Outcome

The client has refinanced the acquisition bridge and secured funding for the full capex programme, with the credit process and certainty of execution significantly quicker than the other routes available.

Post-capex, the business plan targets an owner-occupier or single-let strategy, with a multi-let strategy as a fallback. Lease marketing will begin once works start on site. The deal is the team’s third transaction with the client.