Avamore Capital structures £4.8m loan against part complete development in North London


D'mitri Avamore Capital profile

Avamore Capital issued the loan after the borrower faced a number of unexpected challenges on site and time was running out to complete and exit the scheme with their existing finance facility.

The borrower, who has previously worked with Avamore, had proven themselves to be a strong sponsor, providing the lender comfort to deploy capital on this second scheme.

The site was originally bought with the help of another lender in January 2020; at the time, it consisted of an office building with a ground-floor restaurant/bar.

At the point of purchase, there were two existing consents attached. The first was approved in July 2018, allowing the first two floors to be converted into twenty-nine studio and 1-bedroom flats under permitted development rights.

The second consent of October 2019 allowed the borrower to construct a vertical extension, creating a further nine flats.

Following the purchase, the borrower ran into delays in construction, suffering from the impacts of both Brexit and the COVID-19 pandemic.

Issues were further compounded with the main contractor performing poorly which led to a recalibration of the professional team including the appointment of an experienced project manager to work alongside the borrower and helping regain some of the momentum lost on site.

Following this period, it became clear that although the developer had made significant progress as the PDR units were near practical completion and the vertical extension was wind and watertight, the existing development facility, out with another lender, did not allow sufficient time for the borrower to complete the build and exit the project.

Therefore, the borrower and broker approached Avamore to review refinance options. Considering the performance of the site previously funded by Avamore, the lender felt comfortable progressing with the part-built scheme. Furthermore, the strength of the underlying asset had been demonstrated as 21 of the units had already been sold under Help to Buy.

Using their Part Complete Development product, Avamore Capital was able to refinance the existing debt, provide the borrower a Day 1 equity release for working capital and fund 100% of the remaining works so that there were no more cashflow-related delays to the final construction elements.

Avamore issued a 12-month loan providing the borrower with peace of mind that they had time to complete the units and exit at the right price.

D’mitri Zaprzala commented:

“The beauty of our Part Complete Development product is that no matter what stage a project is in we’re able to step in and fund all remaining works.

We know borrowers today are hitting an increasing number of sticking points, but we are proud that we can still provide support and give much-needed time and money to help them complete their schemes securely.”