United Trust Bank (UTB) has completed £35.5m of build-to-rent finance, structured as a bridge-to-investment facility, against a mixed-use scheme in South-West London with a GDV of £51.1m.
UTB’s Structured Property Finance team provided the five-year facility, which lets developer Dominus New Homes refinance its existing development loan and release equity from the scheme as it nears practical completion.
The scheme, known as Wandle Place, comprises 96 BTR apartments and about 9,000 sq ft of commercial space in Earlsfield. Tenants agreed terms on nearly half of the apartments within seven weeks of marketing. Dominus New Homes has delivered more than 2,000 homes and has experience in the BTR sector.
“Our business model has always been to build for sale, but current poor demand to buy new flats in London required a rental approach this time, together with an investment loan to repay our development finance on time,” said Chris Mason, director of Dominus New Homes.
“After all the hard work involved in bringing a development of this scale to completion, it’s particularly rewarding to see such a quick and positive response from prospective tenants.
“With UTB’s funding in place, we can concentrate on getting the remaining apartments let, welcoming our first residents and making this a development people will be delighted to call home.”
Property Finance Services, which acted for Dominus New Homes, introduced the opportunity to UTB.
“Dominus New Homes have an outstanding track record in residential development and have delivered another high-quality scheme,” noted Stan Lersch, founder of Property Finance Services.
“With the development nearing completion, the priority was to secure a funding solution which would refinance the existing facility, release some equity and provide long-term certainty without the need for another refinancing exercise in a few months’ time.
“UTB understood exactly what we were trying to achieve and came back with a well-structured proposal which worked for the clients both immediately and over the longer term.”
UTB structured the build-to-rent finance at 70% LTV, giving the borrowers funding through the initial letting period and into the investment phase. The terms in full:
- Loan size: £35.5m
- Development GDV: £51.1m
- LTV: 70%
- Term: five years, with a stepped-down rate once the agreed ICR is achieved
The facility also lowers the lending margin once rental income stabilises and the borrowers reach an agreed interest cover ratio (ICR). UTB expects that within three to six months of practical completion, which reduces the borrowers’ funding costs as the scheme matures.
UTB described the deal as an example of its appetite for substantial lending across the living sector and its ability to structure facilities that carry developers from construction into income-producing investment assets.
“Build-to-rent is an increasingly important part of the UK residential property market, and developers need funding partners who understand that completing a scheme is only one stage of the investment journey,” explained Martin Cameron, business development director for structured property finance at UTB.
“At £35.5m, this is a substantial commitment to a new UTB customer, and a good example of how our Structured Property Finance team can provide flexible, commercially attractive funding for larger and more complex property transactions.”
If you’re exploring bridging or development finance, get in touch and we can connect you with the right lender.
