Loan Amount:
£2,400,000
Property Value:
£3,600,000
LTV:
70%
Major conversion projects, when done right, can provide property investors with plenty of opportunity. Some office blocks have been left vacant in recent years. But, with some structural changes, the same building could provide multiple flats for a very appreciative local population.
One of our underwriters was recently presented with a similar scenario. A borrower approached us for finance to purchase a commercial property. Planning had been granted to change the use of the building, and turn it into several flats – a common scenario we are seeing right now.
While this plan was solid, we had to address certain challenges before we could issue funding. Shortfall issues emerged during our review, while the property’s vacant condition posed income problems. To find a way forward, our underwriter got to work.
Focusing on the long-term
While the finances for the deal in its existing situation were less-than-ideal, we saw that the investment’s outlook had plenty going for it. The borrower also had a solid exit strategy already in place. This reassured us that finding a long-term solution wouldn’t be a problem for them.
The underwriter also confirmed how the shortfalls involved would be covered. With these issues covered, and the long-term potential of the project, we delivered the finance required.
Utilising existing spaces is key
We need to take action on our empty buildings. Independent research we produced in late 2023 revealed that many believe there has been a rise in the number of empty buildings blighting our high streets, and that investors need to be incentivised to act.
Generally, most want to see legislative encouragement, and the majority would be in favour of turning empty commercial properties into new residential assets.
Fortunately, at Market Financial Solutions (MFS), we’re able to accommodate this. Our funding can be used for conversion plans of all kinds, from the straightforward to the extreme. So, if your clients plan to turn an office into modern apartments, or transform a science lab into luxury residential spaces, we’re here for you.
Further reading:
- Featured Product: Commercial & Semi-Commercial Bridging Loans
- Explainer Video: Commercial Bridging Loans
- Tool: Bridging Loan Calculator
- Guide: Commercial Property – The Complete Guide
- Blog: Commercial property tax guide – what taxes do investors need to pay and what are the allowances?
- Blog: Commercial property valuation: The key elements
- CPD Course: Commercial Property Training Certification