BRIDGE LOAN
Realia Family Office offers a unique opportunity to participate in residential development projects in the United Kingdom. This strategy is based on exclusive information about territorial development plans, agricultural land incorporation, and expansion of existing settlements, with the aim of obtaining construction permits within two to three years.
We propose joint investment in this project, with a partnership involving one of the leading developers in the UK. This strategy includes a guaranteed buyout of land assets by the state construction companies such as Home England and others, which conducts comprehensive residential development in the country.
We offer participation in financing the construction project of a residential complex, which is an investment product with a high capital return guarantee, secured by a collateral on the land plot. Investment security is ensured by the fact that in case the developer fails to fulfill their obligations, the land plot will be sold on the open market at a price that enables full investor capital recovery, including interest and further costs, since the project’s Loan-to-Value (LTV) ratio does not exceed 50%.
- Investment volume starts from £250,000.
- The cost of land plots in these projects ranges from £2.5 million to £10 million.
- Coupon yield ranges from 10% to 16% annually, paid quarterly over 2-3 years.
- Success fee from land sales is 10-20%.
Participation in this project can be realized through a syndicated credit in the jurisdiction of Luxembourg, and for citizens of CIS countries through Abu Dhabi Global Market (Club Holding) or Qatar’s financial center (Club Holding), which solves issues related to Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures for British legal companies involved in the transaction.
One of our partner’s completed projects:
Bridge financing for the construction project of a residential area in Hook, Murrell Green, Hampshire, UK (100 km from London).
Project parameters:
- The purpose of the loan is to refinance current obligations and obtain development permits.
- Loan-to-Value (LTV) ratio is 55%.
- First lien mortgage on the land plot, shares of the company owning the plot are pledged.
- Investor security involves participation in a syndicate with further transformation into bonds listed on the Luxembourg Stock Exchange.
- Loan amount is £17.9 million.
- Interest rate is 10% per annum (interest is paid quarterly) for 18 months, increasing to 11.5% per annum upon extending the term to 24 months.
- Repayment term is 18 months, extendable to 24 months.
- Participation in success fee from project sales is 10%, recalculated to Internal Rate of Return (IRR) of the project.
- Proposed IRR, taking into account the success fee, is approximately 21%.
Key Information:
- Location: Totters-Farm, Hook, Hampshire, UK. One of the most attractive residential areas: adjacent to the M3 motorway, London road A30, close to a railway station, 30-minute drive from Heathrow Airport.
- Land cost: £32.5 million (BNP Paribas valuation as of November 2021).
- Number of houses: 800 (480 private, 320 affordable housing). Agreement for construction of affordable housing was signed after obtaining permits.
- Total area: 880,000 square feet (approx. 82,000 square meters).
- Estimated plot value, subject to obtaining regulatory documents: £70.4 million.