Arc & Co. has announced that it has successfully completed a £1.2m refinance for a client’s buy-to-let portfolio comprising five residential apartments, navigating a complex mix of corporate structures and international shareholders.
The portfolio was held across two SPVs, with the majority of ownership (>75%) held by South African shareholders. Two of the properties were within a UK SPV ultimately registered to a Mauritian company. This required careful restructuring and detailed due diligence to meet the lender’s KYC requirements and achieve maximum leverage.
Challenges in the transaction included:
Limited options for foreign national buy-to-let mortgages, with most lenders capping at 65% LTV.
Classification of South Africa as a high-risk jurisdiction, which excluded many lenders.
Two assets held in a UK SPV with ultimate ownership in Mauritius, triggering enhanced KYC checks.
Requirement for overseas shareholders to sign loan documents, which risked delaying the refinance.
Dieter Kerschbaumer, asset finance advisor at Arc & Co., leveraged the firm’s network of funding partners to identify a lender able to support the client’s requirements.
Key solutions included:
Transferring the two Mauritius-owned assets to the other SPV held by the UK group eliminates the need for additional due diligence.
Restructuring SPV ownership, with the holding company taking a 96% share and two UK directors, 2% each, allowing a minority shareholder waiver for the South African shareholders.
Appointing Lightfoots as dual representative on the legal documentation, speeding up the process since the firm already held client information.
The deal secured a £1.2m refinance facility with a five-year fixed rate of 5.89% from a challenger bank. No loan documents were required from South African shareholders, and the company structure enabled optimised leverage otherwise unavailable to foreign nationals.
Dieter Kerschbaumer (pictured), said: “It was great to structure a solution with the borrowers that enabled a smooth transaction and unlocked leverage that wouldn’t otherwise be available in a limited market for foreign nationals. The borrower’s proficiency and the bank’s commercial approach were key to the successful end result.”
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