Specialist finance broker Arc & Co. has arranged a £4.7m funding package across three facilities for a property investor facing portfolio pressures, enabling refinancing of existing assets and acquisition of two development sites.
The transaction, managed by senior broker Corey Dennis, was initiated by an approaching maturity deadline on a buy-to-let facility. The underlying asset, a 16-unit residential block held under single freehold, had been downvalued by £400,000, reducing refinancing options and increasing leverage constraints.
Aggregate valuation approach
The broker arranged a £2.9m bridging facility at 75% loan-to-value, calculated against the aggregate market value of individual units rather than a discounted block valuation. This valuation methodology provided sufficient leverage despite the revised property assessment.
Following stabilisation of the residential asset, two additional five-year fixed-rate facilities were arranged across semi-commercial and commercial properties, totalling just over £1.9m. Both were structured at 73% loan-to-value against vacant possession value, with pricing at 6.25% and 7.6% respectively.
Capital release for acquisitions
The facilities were structured at 73% gross to vacant possession value with fees added, allowing the client to extract capital. The funding repaid the existing lender and generated equity to support acquisition of two new development sites.
“From the outset, this was about more than simply refinancing an existing facility, it was about protecting the client’s position and creating a clear route forward,” said Dennis. “Despite the down valuation, it was key to approach a lender that would accept the aggregated value of the individual units.”
He added that the structure “ensured the existing facility could be redeemed and provide stability” whilst enabling portfolio refinancing and capital release for new acquisitions.
Implications for block valuations
Down valuations on residential blocks remain a challenge in the current lending environment, particularly where lenders apply single block valuations rather than assessing individual units. The case illustrates how lenders willing to underwrite on an aggregate basis can alter achievable leverage levels following significant valuation reductions.
For investors managing mixed portfolios under time constraints, structuring facilities in coordinated stages may unlock equity that single refinancing transactions would not provide. Brokers identifying lenders with flexible underwriting criteria, particularly around valuation methodology, may be positioned to provide solutions where conventional refinancing routes prove insufficient as down valuations continue to affect leveraged property portfolios across the UK.
