Although in the majority of UTB’s development finance cases the borrower is an experienced and well established developer, in this instance we found ourselves in the unusual position of providing a £2m facility to a publican with no previous development experience.
The Bank was approached by a development finance broker to consider a proposal to fund the redevelopment of a former public house site in Hertfordshire to create 13 new apartments.
The site owner was a publican who had over many years run several successful public houses in the locality. However, this particular pub had fallen into disrepair and was economically unviable as an ongoing business. He therefore sought planning permission for its redevelopment and after lengthy negotiations, permission was finally granted for 13 new apartments and the pub was demolished and site cleared ready for the build to commence.
The publican then approached an experienced project manager to oversee the development and arranged to transfer the site into a newly formed company so that a joint venture (JV) structure could be put in place. The arrangement being that the project manager would oversee the construction and marketing of the development and have a vested interest in the project’s overall success whilst providing limited financial input themselves. With the JV structure in place, the project manager brought on board an experienced contractor and once the Bank’s due diligence was complete we were in a position to start releasing funds.
The site was unencumbered at the point of drawdown so UTB simply advanced a sum to cover the Stamp Duty for the transfer of the site into the JV company and released the first certificate for the preliminary costs. The contractor is now on site and building.
Development Loan circa £2.m
GDV – 46%