Specialist debt advisory firm Arc & Co has arranged a £7.3m acquisition and stabilisation loan for a multi-let office building in central Glasgow, overcoming structural challenges to secure long-term funding at terms typically associated with more secure assets.
The £7,322,500 facility was structured by Philip Kay, director at Arc & Co, to support both the purchase and subsequent asset management of the property.
Despite a weighted average unexpired lease term (WAULT) of less than one year – a feature that would normally require short-term bridging finance at higher margins – Kay was able to secure stabilisation funding on competitive terms.
“This case demonstrates the value of identifying lenders who truly understand both the asset and the borrower’s strategy,” Kay (pictured) said.
“The lender’s appreciation of the building’s fundamentals and the sponsor’s track record enabled us to secure stabilisation funding where others might have only been able to offer bridging terms.”
Kay highlighted that the high net initial yield at acquisition offered a sufficient cushion to service the debt, even in the event of lease expiries or tenant breaks. Working closely with a lender that specialises in stabilisation finance, he was able to demonstrate both the strength of the asset’s location and the borrower’s value-add business plan.
The transaction achieved a loan-to-value of 67.5% with a margin of 4.25% over a three-year term – a notably competitive rate given the short WAULT and the regional nature of the asset. The client was also supported by a joint venture equity partner in the form of a major New York-based developer, a sign of renewed US investor confidence in the UK regional office market.
