United Trust Bank provides £35.5m bridge-to-investment loan

United Trust Bank (UTB) has provided a £35.5m bridge-to-investment facility secured against a newly completed mixed-use build-to-rent (BTR) and commercial development in south-west London, valued at £51.1m.

The five-year loan is set at 70% LTV. It refinances the developers' existing development facility and releases a modest amount of equity.

A scheme in demand

The development has 96 BTR apartments and around 9,000 sq ft of commercial space, in a well-connected and popular suburb. Early letting demand has been strong, with tenancies agreed on almost half of the apartments within seven weeks of marketing.

The deal was introduced by Stan Lersch, founder of Property Finance Services, on behalf of experienced developers who have delivered more than 2,000 homes. They approached UTB as the scheme neared practical completion and they needed to move off their construction loan.

Built around the lease-up

A bridge-to-investment loan is designed for exactly this stage of a project. It takes a newly completed scheme from construction through the letting period, until the rental income is established and the property can be valued and financed as an investment.

UTB's Structured Property Finance team tailored the facility to the borrowers' plans. The loan includes a margin reduction once rental income has stabilised and an agreed interest cover ratio (ICR) is reached, which is expected within three to six months of completion. This means the cost of borrowing falls as the scheme proves its income.

The deal is UTB's first with these borrowers. The bank said both the quality of the scheme and the developers' track record gave it confidence to back such a large facility for a new customer.