“Fiduciam’s latest transaction reflects our continued confidence in the London market, underpinned by yield growth and resilient fundamentals”
– Marc Morris – Fiduciam
A £28m bridging finance deal in London has marked a shift for property investors, with rental income now fully covering loan interest for the first time in over a decade.
Specialist lender Fiduciam funded the acquisition of a 43-unit residential block in Camden at 70% loan-to-value (LTV), with a three-year term. The scheme generates £2.25m in annual rent, equating to an 8% yield, enough to push the interest coverage ratio above 100%.
For landlords and property investors, the deal signals a notable change in the London property investment landscape. Rising rents combined with softer property prices are beginning to improve income returns, particularly for larger, well-located assets.
Deal breakdown
The borrower, an overseas-based real estate partnership, moved quickly on an opportunistic purchase. That required a lender capable of structuring a deal at pace while managing cross-border complexity.
Fiduciam delivered funding against the asset’s break-up value, which helped manage downside risk while supporting a relatively high leverage position.
The investment strategy focuses on repositioning the building into a hybrid co-living scheme. The 43 apartments range from 50 to 150 square metres, with one to three bedrooms, offering flexibility for multiple tenant types, including young professionals, corporate tenants and international students.
The sponsor expects to increase rental income by more than 10% through this repositioning. If achieved, this would push the yield beyond 9% on the original purchase price.
Additional income will come from a 44-space car park, which will be leased to a national operator. Once the asset delivers a stable income profile, the borrower plans to refinance into a longer-term bank facility.
“Fiduciam’s latest transaction reflects our continued confidence in the London market, underpinned by yield growth and resilient fundamentals,” notes Marc Morris, Fiduciam head of underwriting (UK & Germany).
“The loan benefits from an expected interest coverage ratio above 1.0x, an initial rental yield of approximately 8% on purchase price, and scope for enhanced returns by utilising the sponsor’s experience in the corporate letting and international student markets. The facility was structured with a disciplined approach to risk, with leverage assessed against the asset’s break-up value to ensure strong downside protection.”
Why London is attracting property investors again
Rental growth across the capital has accelerated, driven by limited housing supply and sustained tenant demand. Data from sources such as Rightmove and Zoopla show rents rising faster than property values in many boroughs.
This shift has improved rental yields, which had been compressed for years. In prime and inner London locations, yields are now becoming more attractive to investors who previously struggled to generate sufficient income returns.
Camden, in particular, benefits from strong demand from professionals and students due to its central location, transport links and proximity to major universities and employment hubs.
At the same time, softened property prices have created buying opportunities. Investors able to act quickly, often using bridging finance, are targeting assets where value can be added through refurbishment, repositioning or alternative rental strategies such as co-living.
How bridging finance works in projects like this
Bridging finance is a short-term loan used to secure or reposition property quickly. It is commonly used by property investors who need fast access to capital or who plan to refinance once a project stabilises.
In deals like this:
- The lender provides funding based on the property’s value, often up to 70% LTV
- The loan term is typically between 6 months and 3 years
- Interest can be serviced monthly or rolled up
- Investors aim to increase the property’s value or income during the loan term
Once the asset generates stable rental income, investors often refinance onto a cheaper, long-term mortgage. This strategy allows them to unlock value and reduce borrowing costs.
In this case, the key milestone is achieving an interest coverage ratio above 1.0x. That means rental income fully covers the loan interest, which strengthens refinancing options with traditional lenders.
Johan Groothaert, CEO of Fiduciam, added, “This deal highlights Fiduciam’s ability to move quickly and execute complex transactions. We continue to see strong opportunities in London, particularly where experienced sponsors are acquiring and repositioning assets to meet evolving demand.”
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