Case Study · United Kingdom

Property developer purchases commercial building at deep discount

19 August 2022

Property developer purchases commercial building at deep discount

Savvy Property Developer Snaps Up Commercial Building at Deep Discount

A property developer in London has secured a fantastic opportunity by purchasing a commercial building at a deep discount. This strategic move allows the developer to renovate and reposition the property for maximum return on investment. The deep discount provides a significant advantage and sets the stage for long-term success in the highly competitive property market.

Related: Read about when Rikvin Capital enabled a foreign investor to leverage industrial property for working capital

  • Location: Brentford, London
  • Market Value: £28,900,000.00
  • Loan Amount: £20,000,000.00
  • Loan-to-Value: 69.20%
  • Duration of Loan: 24 Months
  • Payment Schedule: Monthly
  • Asset Type: Commercial Building
  • Completion Time: 3 weeks

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FAQ

Can Rikvin Capital fund a £20M+ commercial acquisition at a deep discount?

Yes. The Brentford case lent £20 million against a £28.9 million commercial building (69.20% loan-to-value) in 3 weeks for a developer buying at a discount. Large below-market commercial acquisitions are well-suited to short-term private financing because banks struggle with the deep-value pricing.

How much can I borrow when the purchase is well below market value?

We lend against the lower of purchase price or independent valuation. The Brentford deal closed at 69.20% loan-to-value of purchase, but on the £28.9M market value the effective loan-to-value was lower and safer. This makes deep-discount purchases attractive to fund.

How long does this kind of acquisition loan typically run?

12 to 24 months. The Brentford loan ran 24 months to give the developer full time to renovate, reposition and refinance into a long-term commercial loan or sell at the higher post-renovation value. Longer terms suit large repositioning projects with a clear value-creation plan.