Specialist commercial lender InterBay, part of OSB Group, has provided a £3.8m commercial finance facility in Central London.
The loan supported the transfer and refinancing of a four-storey commercial building with three tenants, which had been held in a family trust.
After the trust was annulled, the asset was moved into the client’s name, while another property from the trust went to a family member.
These arrangements led to several complexities and required exceptions to standard lending policy.
The client wanted to release capital from the commercial property to fund the build of two new residential units on their own land, with planning permission in place.
InterBay supplied an interest-only term loan over 120 months, allowing the client to go ahead with the programme without using a development finance facility.
The new residential units will be kept as rentals.
Marc Callaghan (pictured), head of commercial lending at InterBay, said: “Transferring property out of a trust structure can be highly complex and must meet specific legal and taxation conditions.
“Considerations around Inheritance Tax (IHT), Capital Gains Tax (CGT) and other liabilities all come into play.
“Our Specialist Finance Account Manager, Simon Ward, worked closely with Mark Jerman at Watts Commercial to identify the most effective route to funding the client’s development ambitions.”
Mark Jerman, senior commercial manager at Watts Commercial Finance, said: “The client needed to raise capital to support the build costs for two new residential properties.
“While a traditional development facility was an option, it would have introduced additional professional layers, fees and complexity.
“Instead, we agreed a simpler, more cost effective solution: securing a term loan against unencumbered assets within the client’s portfolio, with full funds released at the outset.”
Jerman added: “InterBay demonstrated exceptional expertise and flexibility throughout, and the collaborative approach between our teams resulted in an excellent outcome for the client.”