Coventry & Cardiff

Mortimer Street Capital arranged a £4.1m, five-year refinance facility with a Challenger Bank, secured against a portfolio of 11 student houses in Coventry and Cardiff. The facility repaid the borrower’s existing lender and provided a modest equity release.

The portfolio comprises 80 bedrooms let to students at the University of Warwick, Coventry University and Cardiff University, generating rental income of around £540,000 per annum against a valuation of £5.86m. All 11 houses are HMO-licensed, and several have been extended or given loft conversions to increase the number of lettable rooms.

The client needed both certainty and flexibility from their debt. Rather than arranging a single loan, MSC structured the facility in two tranches: £3.1m on a five-year fixed rate and £1m on a variable rate. Written on an interest-only basis, the structure allowed the borrower to fix the majority of the debt while retaining the option to repay the remaining tranche early.

The ownership structure added further complexity. Shares were held across several classes, some through bare trusts, and existing shareholder loans had to be subordinated to the bank. The security package therefore included a share charge and a deed of subordination, alongside legal charges over each property, a debenture and an assignment of rental income.