Cohort Capital has provided a £3.8m bridging loan to refinance a maturing development facility and fund the final construction phase of a luxury residential scheme in London, after contractor insolvency left the project in a precarious position.
The lender completed the transaction within two weeks, providing the speed and certainty the sponsor needed to meet an impending deadline and avoid losing the development entirely.
A complex deal with cross-collateralised security
The facility was secured against a cross-collateralised portfolio spanning four assets: the London development site itself, two additional residential apartments in the capital, and a 90-acre residential estate in Scotland that includes fishing rights, a principal house, and a secondary lodge. The loan was structured at 56% loan-to-value, a conservative ratio designed to provide meaningful equity cushion and downside protection for the lender.
The borrower is a seasoned London residential investor who acquired the development property in 2010. He had already sold the lower units on long leases while retaining the freehold, and following planning permission for a roof extension, he progressed a scheme to construct five luxury new-build apartments above the existing structure. The units range from one to three bedrooms, spanning approximately 600 to 1,485 sq ft.
Contractor insolvency created a funding gap
The sponsor originally sourced development finance from a separate lender, but the project was derailed by contractor insolvency and subsequent disputes with professional advisers. Despite construction being close to completion, the distressed circumstances meant the existing lender's facility was approaching maturity before the works could finish, opening a funding gap at a critical stage.
Contractor insolvencies remain a persistent challenge for property developers across the UK, and this case illustrates the unpredictable risks that can surface even on schemes that are nearly done. The sponsor's track record in London residential acquisitions, asset management, and development gave Cohort Capital confidence in the underlying project, though it could not entirely remove the risks associated with the prior contractor failure.
"This transaction exemplifies the type of bridging solution we specialise in at Cohort Capital: time-sensitive situations that require both sophisticated structuring and rapid execution," said Karam Salh, senior analyst at Cohort Capital (pictured).
"The sponsor approached us with a redeeming facility, a partially completed development, and a history of disruption following contractor insolvency. What made this deal particularly compelling was his experience in the London residential market and a proven track record of successful exits."
He added, "While this experience provided confidence in delivery, it could not fully eliminate the risks associated with prior contractor failure. Accordingly, we structured the facility with cross-collateralised security to strengthen downside protection."
"Ultimately, this deal reflects our core philosophy: backing experienced sponsors with strong fundamentals through flexible, pragmatic financing that helps them navigate temporary disruption and reach the finish line."
How the facility was structured
Cohort Capital's bridging loan enabled the sponsor to repay the existing lender, create the breathing space needed to appoint a new contractor and resolve outstanding disputes, and allocate £700,000 to complete the remaining construction works to practical completion.
The facility was structured with staged drawdowns monitored by a quantity surveyor, with cross-collateralised charges providing additional oversight. The phased approach ensured efficient progress through the final construction phase without compromising speed.
Key elements of the deal included:
A 56% loan-to-value ratio across a cross-collateralised four-asset portfolio
£700,000 ringfenced specifically for completion works
Quantity surveyor oversight of staged drawdowns
Full transaction completion from underwriting to funding within two weeks
What happens next for the development
On reaching practical completion, the sponsor intends to refinance the completed portfolio onto long-term buy-to-let facilities, transitioning from short-term bridging finance into a more sustainable hold structure for the London residential assets.
The deal adds to a growing body of bridging finance transactions where lenders have stepped in to replace or refinance distressed development loans, particularly where borrowers can demonstrate strong underlying fundamentals despite project-level disruption.
For UK landlords and property investors navigating similar situations, it underscores the importance of working with lenders that can move quickly and structure around complexity rather than away from it.
