Sometimes, commercial ventures don’t work out, but that doesn’t mean they need to completely derail a person’s supplemental property investment plans.
In the last few years, with the interest rate and lending appetite changes we’ve seen, we have noticed an uptick in commercial property investors seeking bespoke finance solutions for their modern challenges.
This can be particularly astute with larger scale investments. Take a property investor who owns a research and development (R&D) asset, and needs to refinance an existing facility secured against it. This property may be let on a long-term lease, with a short-term break clause. Perhaps the client needed the flexibility to sell the property relatively soon due to looming ERC changes.
An understandable scenario. But what if the borrower was also in the process of navigating an ongoing IVA of a related company? This could cause additional headaches from an underwriting perspective.
The importance of breathing space
Fortunately, we have specific products that could help here. Via our Commercial Tier 2 product, we could deliver a structured solution that offers security and flexibility for both the client and us.
A two-year fixed rate would align with the borrower’s break clause in the lease, giving them a clear timeframe to consider their exit strategy. Raising additional funds could also enable the client to cover any IVA costs. Ringfencing funds for additional costs would ensure we stayed fully protected amidst the ongoing process, mitigating risks for all parties involved.
All this would allow the client to refinance smoothly, as they navigate a challenging situation. By providing a two-year term, they would have security for the immediate future, and the flexibility to execute their plans for the R&D unit, while also improving their overall financial position.
Investing in 2025 may be complicated
Finding unique solutions to business-related complications may become more common over the coming months. The number of companies going bust hit a 30-year high in 2024 and with hiked tax costs in 2025, it’s unclear how many industries will end up doing well by the end of the year.
Fortunately, we’re in a position to help any property investor trying to progress via a struggling industry. Across all our products, we can support a broad range of commercial property types. This includes standard corner shops, through to sprawling retail centres.
What’s more, we can accommodate IVAs, defaults, bankruptcies, and more. We’re ready for however complicated things get this year.
