Singing Pig

Hi all

In a scenario where a commercial property is purchased, then renovated to add value.  A surveyor then doesnt agree with your new market value leaving you short to repay both the initial purchase and refurb works, for the purpose of this example 20k short once an 80% LTV has been taken out.  Are their any financers out there that will 'topup' the difference secured against the property if the yield is strong enough?  on, lets say a 5 year loan? 

I put mezzanine finance in the title, but if anyone could tell me roughly what the lower limit is for mezzanine?

Ollie, With commercial property you have a VP valuation which is basically the bricks and mortar valuation then a valuation with a tennant in place. This valuation will be based on the lease (value and length) and the covenant of the tennant.

If you can get a tenant in there that will normally lift your value which might get you over the hurdle of PP and cost of works. (i am assuming that you dont have one in place already)

 Mezz is very rarely given out on commercial investmment property unless it is a landmark building, the tenant is a very strong tenant FTSE 100 or Govt, there is a future development scenario and planning uplift available and the amounts for mezz are min £500k-£1m on an investment property and they are usually supplied by the senior debt lender.

 £20k is really a friends and family amount as opposed to a commercial lender.

Sorry not to be more help.
 

Thanks Brian

Are their any lenders/valuers that will go out on a limb and give a VP valuation and a tennanted valuation before works are carried out?

This particular commercial venture offers a very high yield once fully let but is not suited to blue chip clients or long leases.  It will probably attract

small individuals/partnerships who dont want to commit to long leases.

Any good commercial valuer will be able to put together a VP value and a tenanted value, cost up the works and come back with a residual site value, and this then becomes teh basis on which any lender would look to fund the developement.