£2.5m Lombard loan secured for redevelopment properties

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Case Profile

A client approached us seeking £2.5m to fund a redevelopment project involving two unencumbered properties. The properties in question were to be used as their main residence in London and a holiday home in Scotland. Although the client has significant investments of over £6.5m, almost all of it was one AIM (alternative investment market) listed stock which he did not want to liquidate.

The client was a founder of a successful business that he had sold in return for a sum paid in instalments across several years. The client does not have a regular job, and payments received from the business are regarded as a non-traditional income. Consequently, not many banks were happy to lend to him.

Solution 

We approached elite private banks to see if there was a way to use the single line of stock as security rather than the properties. We sourced a private bank that liked the client’s profile and was familiar with his stock, which they already have in their own managed portfolios. For this reason, the bank offered an unusually high LTV of 38% in the form of a Lombard loan against the listed stock. The loan was structured as a renewable revolving facility without any non-utilisation clauses, which essentially means that the client could draw funds as and when he needed them. He would only pay interest on any money he withdrew. The client had all the funds he needed to complete both projects at a very low cost. This straightforward, cost-effective solution was found by looking at the position holistically, rather than just focusing on the client’s original request for development finance.

Our client is thrilled to keep control of his investments and looks forward to redeveloping his properties.

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