Sirius structures highly leveraged development loan on multiple HMO purchase

17 January 2022

Sirius Property Finance has structured a bespoke development loan to provide 87% of purchase price on day one along with the entire build costs on a portfolio of 10 properties being converted into HMOs.

The £6.6m loan was required to purchase a portfolio of 10 properties and complete the building works to convert them into high-standard HMOs. The units had already been pre-sold to a large investment fund, which enabled Sirius to structure a bespoke loan with a maximum leverage of 87% on day one along with the entire build costs.

The transaction proved to be so successful that the lender has already set aside £60m to help fund the client’s next development, which will be structured on a similar basis with a pre-sale agreed with an investment fund. In addition, a further two lenders have expressed interest in agreeing terms with the client.

Fodi Christodolou, Senior Associate, Residential & Investment Finance at Sirius Property Finance, said: “It was clear from the outset that this case would require bespoke terms, outside of standard lender policy. So, we took the approach of interviewing lenders we thought might be interested, to ascertain which would be most suitable for the deal. It certainly worked.

“Not only were we able to secure a £6.6m loan, with the client putting just 13% into the deal, but we also secured very competitive rates and we were able to progress the staged payments without the need for formal quantity surveyor inspections. On top of this we have agreed future funding for the client and have additional options with alternative lenders for the future.

“It’s exactly this type of case that requires a considered and inventive approach, where Sirius excels and it has resulted in great outcomes for both the client and the lender.”