Octane Capital loaned 90% of the purchase price to a property investor client of West Rock Capital acquiring a disused industrial factory in the South East.
The client had taken an option to purchase the industrial unit for £1.5m by placing a deposit of 10% (£150,000).
Having subsequently secured full planning permission for 35 residential units and Colliers valuing the unit at £3m, they decided to exercise the option with a view to selling the factory onto a developer.
Octane lent West Rock Capital’s client the balance of £1.35m, or 90% of the purchase price, to acquire the unit.
Westley Richards, director at West Rock Capital, said: “I am delighted that we were able to help our client with this acquisition.
“We needed to work with a lender that was able to make quick decisions and would immediately understand the value our client had added to the asset by securing full planning permission for 35 residential units.
“Our longstanding relationship with Octane Capital’s founders and extensive experience in arranging short-term loans ensured my client was able to complete the acquisition on time.
“I’m looking forward to working on more opportunities with Octane Capital in the future.”
Mark Posniak (pictured), managing director, Octane Capital, added: “Typically, we wouldn’t go above 75% of purchase price but the nature of the asset, quality of the investor and experience of the broker, Westley Richards, meant we could set aside our usual criteria and structure a bespoke one-off facility equating to 90% of the purchase price — something you don’t see very often at all.
“Hopefully this will be the first of many deals we do with Westley Richards and West Rock Capital.”
It overcame a potential obstacle in that the planning permission involved a pre-commencement condition that certain environmental checks had to be carried out.
The borrower didn’t have time to perform these checks so they represented an unknown cost to any acquiring developer and therefore the exit.
But Octane Capital’s head of structured finance, Alex Tyrwhitt, concluded that the financial risk was minimal and the loan was able to proceed as normal to meet the deadline.