Upon instruction, we liaised directly with the borrower who outlined they fully intended to refinance in the coming weeks. Please get in touch if you would like to know more.
Sheffield. Portfolio of Student Lets.
A combination of 27 multi-let student properties, which were assumed to be fully occupied in preparation for the new University year.
Upon instruction, we liaised directly with the borrower who outlined they fully intended to refinance in the coming weeks. However, from our discussions with a number of potential lenders it was quickly established that any refinance was extremely unlikely.
Having confirmed there was little opportunity for a refinance across the portfolio, we instigated our possession procedure, whereby we secured all 27 properties across a 2-day period. This involved liaising with all students (and parents in some cases) to obtain tenancy agreements, collecting rent / deposits, changing locks where required and isolating electrics and gas systems.
Once we had taken possession of each property, it was then necessary to assess the marketing strategy and optimum disposal route in order to ascertain which of the portfolio it would be wise to sell first to recover the debt more efficiently.
Unfortunately, having researched the original lending process, it soon became clear that the structure of the loan was ‘optimistic’ and had been based upon the incorrect methodology. Effectively the surveyor had utilised a yield-based approach, which in itself was not wrong, although they had assumed a top end market rent and maximum occupancy across all elements. This resulted in a portfolio value in excess of £8,000,000,however from our calculations this suggested a figure closer to £6,500,000.
Based upon the above, it was necessary to undertake certain works across the properties in order to maximise values, from maintenance works and cleaning through to seeking additional tenants.
In addition, in order to avoid flooding the market and causing increased saturation, we chose to dispose of the individual properties across a range of open market, tender and auction means.
Over a period of 6 months, we managed to dispose of the entire portfolio, although unfortunately as feared this did not cover the original debt. Therefore having undertook an asset trace on the borrower, we obtained 2 additional sites which were subsequently disposed of to fully cover the debt.