Pivot defines the hope value as the value of the site based on the expectation of getting planning permission for residential use.

The specialist lender partnered with Brightstar to provide the 12-month loan at an LTV of 84.4% of the original market value (42.2% of hope value of £2m).

The loan was used to repay a bridging facility used to purchase the building and also to provide additional funds to pursue the planning application for the conversion of the property from office use to residential apartments.

The expected exit strategy for the facility is the sale of security – once planning has been achieved – to a local housing association.

Pivot obtained an external planning opinion to support their underwriting of the transaction, which was positive and suggested that planning should be achieved subject to some minor amendments.

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It was a condition of the loan that the recommendations of the planning opinion were to be followed, in order to maximise the possibility of obtaining planning permission. 

“Being part of a wider real estate group that includes an established residential property developer (Fruition Properties) and a construction company (Area 29) allows us to offer bespoke solutions for seasoned developers looking to obtain planning on a site,” said Vishal Dixit, head of business development at Pivot (pictured above).

“The benefit of having a team of architects, land specialists and planning experts in house, provides Pivot with the infrastructure to offer unique products in the market.”

A spokesperson from Brightstar claimed that there were very few short-term lenders in the market outside of Pivot that would have provided a loan of 85% against the current market value of a commercial block in Wales.

“What is refreshing is that as a lender, [it is] gearing to a high level, but also for the right reasons.

“It would be deemed risky by many, but they did the right background checks on the clients, the onward sale and the asset, and made a sensible commercial decision to support this loan using their expertise and understanding of both the sector, and property market in general.”