Bridgebank Capital has completed a £2.3 million bridging loan advance to an experienced property investor secured against a mixed portfolio of residential and commercial investment properties allowing the business to take up an opportunity to pay off their existing funding debt from one of the many banks currently looking to reduce their property book exposure and willing to take discounted settlement proposals.
The debt forgiveness write off was material and effectively represented a discount of 25% on the original debt. The transaction importantly increased the portfolio yield on debt return from 13.4% to 17.8% as a result of the reduced level of mortgage debt on the portfolio going forward. The borrowers existing mortgage facility term had expired, the bank were not prepared to renew the facility but had a desire to seek repayment and accept a discounted settlement.
The borrowers conduct on the account had been exemplary with no default on the facility terms, the portfolio of 32 properties was profitable and well managed with virtually no void. The introducing Broker had secured indicative terms to refinance the portfolio onto long term mortgages, following the use of the Bridging Loan to secure the settlement transaction. Bridgebank’s ability to fund larger loans, co-ordinate the supporting Valuation and underwriting process and provide direct commercial advice and assistance in negotiations with the outgoing bank, allowed the borrower to successfully complete the opportunity and thereby materially increase his net income yields and business wealth going forward.
Carl Graham, who heads up the large loans team at Bridgebank said “we are seeing more of these larger debt forgiveness opportunities, and if the portfolios are performing and well managed, then we have the appetite to provide the bridging facility to allow property investors to take up these opportunities. This is a very specific area that we are targeting with our introducers. The satisfaction from completing these type of bridging loans is that we materially impact on the businessman’s ability to instantly improve portfolio profitability.”