"Having known the client for over 15 years, it was important for us to deliver a solution that provided stability. GB Bank worked closely with us to structure a facility that achieved exactly that"
- Edward Horn-Smith - Arc & Co.
Commercial finance broker Arc & Co. has secured a £9.4m refinancing facility from GB Bank for a prime West End mixed-use portfolio comprising office and residential assets, with the five-year loan structured at 71% loan-to-value and a fixed interest rate of 6.2%.
The deal was led by Edward Horn-Smith, managing director at Arc & Co. (pictured), who has advised the client for more than 15 years. To make the refinance work, GB Bank top-sliced a regional purpose-built student accommodation portfolio, providing the additional headroom needed to deliver the full £9.4m facility.
Structuring a complex income profile
The transaction presented challenges linked to the portfolio's current income profile, requiring a bespoke approach from both broker and lender to find a workable structure.
"This was a complex refinance given the current income profile of the portfolio," said Horn-Smith. "Having known the client for over 15 years, it was important for us to deliver a solution that provided stability. GB Bank worked closely with us to structure a facility that achieved exactly that."
The use of top-slicing against a separate PBSA portfolio is a technique lenders occasionally deploy to bridge affordability gaps, allowing borrowers to use surplus rental income from one asset to support the underwriting of another. In this case, it enabled GB Bank to lend against the West End portfolio at a level that met the client's refinancing requirements without compromising on loan terms.
Relationship lending in a tighter market
Pankaj Thukral, chief lending officer at GB Bank, highlighted the role that long-term broker relationships play in enabling complex deals to complete. "Long-standing relationships are the bedrock of successful lending," he said.
"Working with Edward and the team at Arc & Co. allowed us to gain a deep understanding of the client's long-term strategy. We are proud to support this mixed-use portfolio refinance, demonstrating our commitment to flexibility and our ability to structure bespoke facilities that meet the specific needs of sophisticated investors."
The transaction reflects a broader pattern in the UK commercial property finance market, where lenders willing to look beyond headline metrics and engage with the underlying strategy of a portfolio are finding opportunities that more formulaic underwriters are passing over.
What the deal signals for mixed-use lending
Mixed-use assets in prime central London locations have faced a more complex refinancing environment over the past two years, with some lenders tightening criteria on office-heavy portfolios amid uncertainty over occupancy trends and valuations. A facility at 71% LTV on a West End mixed-use portfolio, fixed at 6.2% over five years, indicates that specialist lenders remain willing to support sophisticated investors where the relationship and asset quality justify the structure.
With base rate expectations shifting and fixed-rate refinancing activity likely to increase as borrowers seek certainty on debt costs, deals of this type may become more common in the months ahead as investors look to lock in terms before conditions change further.
