Creative repurposing of a Midlands warehousePosted by oblixcapital on Jul 30 2019
It’s now rather common for real estate lending companies to refer to their services as ‘specialist’. As the saying goes though, the proof of the pudding is in the eating and at Oblix Capital we see a number of interesting scenarios that others may not consider.
A recent example was for the significant refurbishment of a former brewing-related Victorian warehouse in a secondary town in the Midlands. The client had already purchased the building with commercial use planning and was letting the building out. Although the site was in the previously industrial centre of the town it was also only 5 minutes’ walk to the retail town centre, the railway station and a 5 minutes’ drive from a major trunk road linking the town to Birmingham, Derby and Nottingham – which meant that it was ripe for further development into residential apartments and thus began a planning process to re-categorise the building.
A entrepreneurial client
The client, an entrepreneur with a number of non-property and property-related ventures alike, had developed several small schemes previously, but nothing on this scale. Following his initial forays into development, his entrepreneurial spirit drove him to start his own construction business as well. However, whilst it might be perceived by some lenders that there is a conflict of interest when the client also owns the building contractor, this can in fact sometimes work in the favour of the lender. As the client contracted with the construction firm using a JCT contract with the normal step-in provisions for lenders, Oblix was happy to proceed. Furthermore, the client had already been made an offer for 20 units from an investor who was of course wanting buy-to-let opportunities.
The refurbishment was substantial and the reconfiguration of the internal layout extensive. The client was also creating common areas and providing parking spaces, all of which would appeal to singles and couples alike. Oblix discussed the presales with the client and it was decided to proceed with 20% as a Condition Precedent to the development loan. The client’s sales strategy and assumption was that the apartments would make excellent letting properties, and as such the majority of the units would be bought by investors. Permission was therefore sought to convert to approximately 100 studio apartments, which would range in price from £80,000 – £130,000.
Commercial bridge option
Whilst not required in this case, Oblix would have been happy to provide a Commercial Bridge for the pending Planning Permission period. As evidenced by this example, Oblix are more than happy to lend up to 85% of the costs for the development period, including a minimum of a 6-month post-completion period for a marketing period, and for sales completions.
Richard Berkley of The Property Funding Agency, who referred the case to Oblix Capital, said “I’m always impressed by the sensible and creative approach that Oblix takes to such cases. This is another example where their development expertise was evident, and they were willing and able to assess the scheme on its own merits.”