MFS lends £1.76m for complex shopping centre purchase

Market Financial Solutions (MFS) has completed a £1.76m bridging loan for a complex shopping centre acquisition.

The lender had provided a £3.8m facility to the client in March to purchase another shopping centre. 

At the time, several other finance providers had rejected the commercial asset due to its empty units caused by businesses exiting leases early as a result of the pandemic. 

However, MFS agreed to lend to the client based on their assets and commercial background and business experience. 

In June, the client returned for further finance to purchase a second shopping centre in the South of England. 

The client was looking to sell the first commercial asset — which had increased in value since the purchase — but was waiting for the deal to be completed.

The second shopping centre had been bought at a commercial property auction, with a 10-day notice to complete. 

MFS instructed a member of its valuation panel, but two issues were uncovered.

The first was that the shopping centre had replaced a petrol station in the late 2000s, raising potential contamination issues. 

MFS’ underwriter worked closely with the valuers and solicitors, establishing that the previous planning permission granted by the local authority when the shopping centre was built had required evidence of no contamination issues.

The second hurdle was that there was a standstill agreement regarding a small area of stonework. 

The lender had to uncover the greatest potential cost of this issue with the solicitors and determine if this would affect the property’s value. 

It was established that the projected income of the asset covered the possible cost of rectifying the agreement. 

Despite the asset having several empty units, the lender was able to provide the £1.76m 12-month loan at 65% LTV within the auction deadline.

“Large commercial units like shopping centres will often present unique challenges for lenders, but we were delighted to be able to assist our returning client by delivering a large loan in a matter of days,” said Paresh Raja, CEO at MFS (pictured above).

“In this case, the fact the asset was being purchased at auction and a tight deadline was imposed, coupled with the issues flagged by the valuer, made matters particularly complex. 

“We applied our experience and expertise to quickly overcome the challenges though. 

“Moreover, as with the original loan we provided to the client, we were also able to see the bigger picture; knowing their business nous and the other assets they held, we knew we could proceed with confidence.”

In April, MFS upped its maximum loan size to £30m and enlarged its maximum loan term to 24 months.

Since the start of this year, the lender has grown its team by 40% in response to increased demand from brokers and private clients.

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