Arc & Co. has arranged a £3.4m buy-to-let (BTL) facility from Quantum Mortgages for a developer in Worthing.
The finance allowed the developer to keep part of a larger residential conversion and refinance existing debt.
The client bought a former office building in Worthing and converted it into 120 flats.
The original purchase was funded by bridge and mezzanine loans, which needed to be repaid.
With slower sales in the market, the developer changed strategy and kept 16 flats as a build-to-let investment for ongoing income instead of selling them all.
Of the 16 units, eight were already let, which provided immediate rental income and lowered letting risk.
The developer put the 16 units into a new special purpose vehicle (SPV) and set up new leases.
The BTL facility was used to refinance the existing debt at a 74% net loan-to-value (LTV).
Gareth Briggs (pictured), head of residential UK at Arc & Co., led a revaluation of the 16 flats, which supported the required leverage for the loan.
With this deal, the developer has paid off the bridge and mezzanine lenders, simplified their capital stack, and now holds a 16-unit portfolio for rental income.
The SPV structure separates risk and helps with long-term management.
Briggs said: “This deal underscores how measured structuring and alignment between lender, adviser and sponsor can unlock value even when exit conditions are difficult.
“Quantum were supportive throughout, and we’re pleased to deliver a solution that balances security and flexibility for our client.”
Zouhair Mihramane, national account manager, South East & West at Quantum Mortgages, said: “It was a pleasure working with Gareth from start to finish on this deal, whereby the applicant was looking for a guaranteed exit on a large development.
“As is the case with multiple units involved, there were many moving parts but nothing, through the assistance of the broker, valuer and conveyancer, we could not overcome.
“Overall, a great outcome for all parties, and I look forward to Quantum and Arc & Co. doing more business in the immediate future.”
