Blackfinch Property’s Flexible Approach Enables Smooth Refinance to Repay a More Complex Bridging Loan to a Developer in Devon

As a provider of financing solutions Blackfinch Property offers an efficient and flexible approach. This applies throughout the life of a loan as the team continues collaborating with developers. Blackfinch works with multiple parties on complex structures, often on deals with complicated backgrounds. The team’s focus is on helping the property community and the UK property market to grow, in turn supporting local economies and communities.

In Q4 2019, the team saw the repayment of one such loan, with a more complex bridging structure. In 2016, Blackfinch provided a £3.3m second charge bridging loan to a borrower refurbishing a hotel into 57 apartments with a restaurant, concierge service, swimming pool and spa. The development is in a popular seafront location in North Devon. The aim was for the project to boost local tourism through the provision of high-quality apartments.

The main development finance was provided by a government-backed agency. The structure was more complex than usual as an agreed element of the deal was that sales proceeds from the apartments could be ‘recycled’ to fund ongoing build costs rather than reducing the debt.

The build itself was also technically challenging and Brexit uncertainty contributed to a longer sales phase than was originally envisaged. Throughout the build, Blackfinch worked in unison with the borrower and the government agency to extend the loan until the borrower could refinance once the higher-risk build phase was complete in mid-2019.

Blackfinch continued to stay close to the project throughout this time, in conjunction with the Monitoring Surveyor used by both lenders. For instance, at one off-site meeting drone footage was used to show the real-time progress of the build from all angles in addition to the normal site visits.

In Q2 2019 the borrower identified a new lender which agreed to repay all of the existing debt in two tranches. With the help of the Blackfinch in-house legal team, a structure was agreed with the borrower, the development agency and the new lender to accommodate the refinance before the formal repayment date.

As part of these negotiations Blackfinch had also pre-agreed a brief extension with the borrower should there have been any unforeseen legal delays. However, this proved not to be necessary and in Q4 2019 the loan was repaid in full and on time.

John Hartigan, Investment Manager at Blackfinch Property, said, “At Blackfinch we pride ourselves on looking at the detail of each and every situation, working closely with borrowers to find solutions where possible. This was a fantastic project reviving a key part of a popular seaside town. A complex and careful assessment was required during the loan to ensure all stakeholders remained aligned. We are delighted there was a seamless conclusion to the development phase of this project.”

 

 

Brokers and developers can note that from 2016-2018 Blackfinch repositioned its place in the market to only provide first charge property loans. This successful refinance redeemed the last second charge loan in the Blackfinch Property portfolio. Blackfinch continues to meet developers’ needs, in 2019 surpassing £150m of loans underwritten on bridging and development since launch.

Blackfinch Property is a fully funded provider of innovative short-term bridging and development financing solutions. For more information email [email protected].

 

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