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28 February 2017

A £7.7m loan followed by a bespoke £547k short term loan…

Shawbrook Bank’s Commercial Mortgages team has just completed a commercial loan on its LCI1 product for an experienced investor looking to refinance their Essex and Suffolk based portfolio including a large office block and a number of industrial units, for £7.7m at a gross LTV of 63%. The loan was submitted by Shawbrook’s long-time Strategic Broker Partner, Simon Purdom of Commercial Financial Services and is one of the largest refinances of a commercial portfolio that the Bank has undertaken.

In addition to the term loan the client also needed a solution that would enable him to sell a smaller unit from the portfolio following minor refurbishment works. The solution was to provide an additional short term loan on a separate facility of £547k, allowing the client to redeem without being charged an early redemption charge. In creating two separate loans Shawbrook were able to satisfy the client’s needs and demonstrate their pragmatic approach to providing good sense solutions. 

With the client eager to refinance away from their current lender, Commercial Financial Services first approached Shawbrook with the raw financials of the potential deal to determine if it would be of interest. To ensure transparency and get the loan off the ground, Shawbrook engaged senior stakeholders within their Underwriting and Credit teams to iron out any issues as and when they arose.

The £7.7m commercial facility took two and a half months (including the Christmas break) to complete from initial enquiry through to funds being released. Considering the sheer scale of the portfolio and the complex nature of the different components, the Shawbrook teams and the broker worked closely together in order to guarantee a lending outcome which was acceptable to all parties.

Shawbrook provided added value by meeting the client to personally address their questions with the Senior Lending Manager on the case, Nick Grant along with Credit Relationship Manager, Tim Rist in attendance. They looked at the case with a common sense approach, structuring it at 63% LTV on a part-capital, part-repayment basis with an additional second charge enabling the Bank to lend the full amount of finance needed.

With a valuer from Shawbrook’s panel manager Appraisers UK instructed, the commercial portfolio valued positively, allowing the Underwriting team and Group Credit Committee to commit to lending at full market value rather than on vacant possession. It was clear from the valuation report and other paperwork provided that the commercial portfolio was well-tenanted, with the broker’s client sensibly growing this portfolio for ten years, weathering the financial crisis of 2007/08 with a sustainable strategy. Considering their decades of experience in the commercial property sector as well as their sensible exit strategy, Shawbrook accepted a reduced personal guarantee. This acknowledged the client’s expertise whilst showing that the Shawbrook teams were willing to be flexible when working with such a professional investor.

Shawbrook’s in-house legal panel Pure Law engaged Birketts Solicitors, a firm local to the client to coordinate all the necessary legal work on the case. Along with Commercial Financial Services and Shawbrook’s Credit and Underwriting departments, Birketts were instrumental in achieving such a positive customer outcome. Both the commercial and bespoke short term loans completed thereafter. 

Simon Purdom, Principal of Commercial Financial Services comments:

“It was clear from reviewing the debt requirements that Shawbrook were best placed, within my lending panel, to provide the most appropriate outcome for the client. As a Strategic Broker Partner I know that they benefit from an expert, open-minded team who would relish the opportunity to provide funding for a significant commercial portfolio such as this. There were some very long days and many hurdles to overcome but we got the best possible end result – a happy client with a lending outcome that is well-suited to their individual requirements.”

Sales Director at Shawbrook Commercial Mortgages Emma Cox adds:

“In our six years of operating at Shawbrook Bank this is one of the most complex and definitely one of the largest commercial property deals we have managed to complete.
 
“It simply would not have been possible without the combined expertise and commitment of the broker Commercial Financial Services, Pure Law and of course, the Commercial Mortgages team themselves. This was a very large facility for a new to Bank customer but, taking into account their strong track record in this sector, we have once again demonstrated our appetite to lend and willingness to go the extra mile when it comes to more complex cases.”