Arc & Co. has announced that it has secured a £7,322,500 acquisition and stabilisation facility for a multi-let office building located in central Glasgow. The three-year loan was arranged by director Philip Kay and designed to support both the purchase and the implementation of a value-add asset management strategy.
The building presented a number of financing challenges, primarily due to its short weighted average unexpired lease term (WAULT), which was under one year. Properties with such short leases are typically financed through bridging loans at higher rates, until the income stream stabilises.
However, Kay recognised that the asset’s high net initial yield provided a sufficient cushion to support debt servicing, even if some tenants chose to vacate or exercise break clauses. With this in mind, he worked to secure a more cost-effective long-term facility, rather than defaulting to a bridging arrangement.
The facility was structured with a loan-to-value (LTV) of 67.5% and a margin of 4.25%, a competitive rate considering the property’s short WAULT and its location in a regional office market.
Kay identified a lender with a specialism in stabilisation finance, who shared confidence in the property’s central Glasgow location and the client’s business plan. That strategy includes a targeted asset management programme aimed at increasing tenancy stability and value over the term of the loan.
Additionally, the sponsor’s joint venture equity partner is a well-established New York-based developer, highlighting renewed interest from US investors in the UK regional office market. This partnership further supported the lender’s confidence in the project’s fundamentals and long-term viability.
“This case demonstrates the value of identifying lenders who truly understand both the asset and the borrower's strategy,” said Philip Kay, director at Arc & Co. (pictured). “The lender’s appreciation of the building's fundamentals and the sponsor's track record enabled us to secure stabilisation funding where others might have only been able to offer bridging terms.”
