Arc & Co. has arranged a £7,322,500 acquisition and stabilisation loan for a multi-let office building in central Glasgow.
The 3-year facility was structured to support both the initial acquisition and subsequent asset management initiatives.
The deal presented unique challenges due to the property’s characteristics – specifically a sub-one-year WAULT.
Usually, such short lease structures would attract bridge financing at significantly higher rates until the income has stabilised.
However, Philip Kay (pictured), director at Arc & Co., recognised that the entry price – reflecting the high net initial yield – provided a sufficient buffer to service the debt even if some tenants exercised break clauses or leases expired.
He ensured that a strong underlying position was established with the lender, combined with a comprehensive asset management strategy, which allowed him to secure long-term stabilisation funding rather than expensive bridging finance.
The loan was delivered at a loan-to-value (LTV) of 67.5% with a margin of 4.25% over 3-years.
Kay said: “This case demonstrates the value of identifying lenders who truly understand both the asset and the borrower’s strategy.
“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.”
