Serviced Apartment Finance
With the rapid evolution of the serviced apartment and apart-hotel sector in the UK, the finance market has traditionally struggled to keep up with the demands of this sector. The nature of this new type of asset class leaves it standing somewhere between a residential asset and a commercial hotel, making it difficult to determine which type of funding would best suit the project. With the demise of traditional high-street bank lending to property developers, a new breed of lender has emerged. These lenders are backed by private funding and are focussed on lending to experienced developers with sites in high profile locations. Over the years, Saxbury has built strong and trustworthy relationships with these lenders and consult regularly with clients on the best way to both finance and exit a project. We also assist them in concluding what style of funding best fits their profile and development over the period of their ownership.
We can help our clients achieve four types of funding, either individually or collectively:
Development finance enables the investor to fund the land at the outset with or without planning permission in place. This can often provide solid, bespoke funding to developers who have prime property sites in mind. Development funding is available with up to a 90% loan, enabling the client to maximise their own equity throughout the construction phase.
This type of lending can be used for buying or expanding property after the development phase, or for refinancing purposes. Once the development is complete and the operator has agreed a lease, we can then restructure the funding into a more traditional 15 to 20-year commercial loan up to 75% LTV with interest rates at sub 5%.
Mezzanine finance can be costly and difficult to secure. A developer must have a very good reputation in the industry, a proven track record, and a viable exit plan. We have access to several principal lenders with significant resources who can make quick decisions. By partnering with us, developers can reduce their equity, spread their risk and considerably enhance the percentage of return on their investment.
The continued strength of the serviced apartment market combined with low returns from bank deposits and traditional investments means there is a growing pool of equity looking to invest in growing this sector. We now have access to equity ranging from private high net worth individuals to pension funds and hedge funds. This gives us a unique opportunity to help our clients fund their projects by looking into options that have traditionally been inaccessible.