Lender Fiduciam has provided a £ 5million development loan for the construction of a £ 10million seven-story residential building in Manchester.
The site has been denied loans from banks and other lenders because of its complicated title deed, with free interest held by the local council and title restrictions imposed by Homes England.
The restrictions resulted in an agreement specifying both overpayments and an ambitious construction schedule that the borrower was required to meet.
Fiduciam was able to grant the loan after renegotiating the surplus so that it became possible to finance the development.
This is an important step, as few lenders are willing to provide development loans on limited land with a surplus, as many are poorly drafted and contain complicated terms.
The £ 5million loan was structured to overcome challenges imposed by complex title deed and surplus, and to reduce the likelihood of cash cuts during the development project.
Fiduciam also handled communications with all parties, reaching an agreement for the long shutdown date to be delayed, providing a more reasonable time frame for completion of development work.
Henry Fisher of Fiduciam comments: “This was a deal that other lenders were unwilling to lend due to its complexity, however, we work with small and medium businesses and developers on a daily basis and as a result , we really understand their business models and the risks associated with different developments.
“It means we can do more than just lend them money, in fact, we can also help guide them through the process. As a result, we were able to set up a financial package to meet the developer’s needs and allow development to progress successfully.
Strong demand for new residential apartments in the Manchester area has minimized the risk of Fiduciam leaving. The expectations of healthy sales are also supported by strong pre-sales interest.
With such strong fundamentals, the lender says it was just about making the effort to overcome the complexity of the title.
Rob Moore, CFO of the Northhold Group, adds: “There were some complicated things about this site that initially proved problematic for development finance, also due to the rigidity of the big banks. Then Covid arrived, disrupting supply chains, forcing less well-capitalized suppliers into liquidation and also threatening a severe cut in financing options. “
“Fiduciam has worked closely with us to provide a facility that alleviates the cash pressures exacerbated by the pandemic. Fiduciam could see that this would be a profitable development, so they went out of their way to overcome the complications and find solutions. “