East London

Mortimer Street Capital arranged a £1.64m first-charge bridging facility with Recognise Bank to fund the acquisition of a four-property residential portfolio in the Wanstead and Leytonstone district of East London, purchased significantly below market value out of a probate sale.

The portfolio — two freehold houses on Barfield Road and Halstead Road, and two long leasehold flats at Gordon Road — was acquired at £1,663,000 against an aggregate market value of £2,235,000 with vacant possession, an average discount of around 25%. All four units were let on ASTs producing £68,700 per annum, which suppressed the price further but also meant the client could not simply refurbish and sell from day one. The borrower’s plan is to see out the existing tenancies, refurbish each unit at their own cost and sell individually within twelve months.

The client’s requirement was to commit no more than 10% equity against the purchase price. By presenting the discount to market value as the underwriting case rather than the price paid, MSC secured a facility of £1,640,000 — leaving a day-one equity contribution of approximately £23,000, or 1.4% of the purchase price, with the loan sitting at 73% of the vacant possession value and comfortably within the lender’s security position on both the tenanted and 90-day valuation bases.