DEAL FUNDED – Cairngorms National Park Hotel to Resi Conversion

An existing client requested assistance with funding for the acquisition and conversion of a former Hotel to form 3 residential dwellings for private sale, along with a large section of land to the rear which will be developed into a mixed social and private new-build flatted development.

This will be the 5th loan we have delivered for this developer in the last 3 years and we continue to assist them with deal structuring and fund raising for each new project they are working on. Both leverage and cost of capital are important to this borrower so we carefully sourced the market for a funder who we knew had an appetite to lend in this semi-rural location, as well as having the capital and a straightforward process to support monthly drawdowns, which has been our experience on multiple other deals completed with the lender.

The numbers for this project, in terms of loan to cost and loan to GDV ratio, worked perfectly for a number of the commercial lenders. The borrowers negotiated a significant discount on the purchase price vs current market value, as a result of building being vacant for some time. This enabled us to delivery 90% of the purchase price for the day one loan and utilise that day one equity to minimise the borrowers contribution into the scheme. This has allowed them to preserve capital for the next acquisition opportunity, which is likely to happen before this project has been completed and sold out.

As a result of the level of research put into the deal by all parties; covering the itemised construction costs, local market exit values and build timescale, we were able to confidently put in place a funding package that will deliver the first 3-units within a 6-month window. We then have a follow-on loan with the same funder ready for the new-build development once the amended planning consent has been signed off by the local authority. 

During the process we were pleased to assist the borrower with the full packaging of the application; including completion of the necessary forms, ensuring the correct supporting documentation was presented to credit, along with preparation of the development cash-flow, taking into account the build program and expected sales receipts and capital values reported by the valuer and local selling agent. We worked closely with the valuer and legal teams on both sides of the transaction to enable a fast and smooth process. 

Concept Financial Group are financiers providing private equity and commercial debt for real estate professionals across the UK. 

If you or your clients have a similar lending requirement please get in touch for a confidential discussion;

[email protected] / 07775 678 087