Crystal and Assetz Capital refinance incorrectly valued care home

Crystal completed the deal, which it dubbed its “most difficult case in company history”, through Assetz Capital with financial goodwill and one of the partner’s houses as security.

The Surrey-based nursing home was purchased by five partners for £2.4m in November 2016, using a £1.4m bridge based on a residential valuation.

However, the property was already used as a care home, while the planned new facility required a £1m update to deliver a first-class service for ageing patients with acute needs.

With exit required in November 2017, the partners’ broker contacted Crystal and the error was uncovered. Eventually, the property’s value was downgraded to £1.7m during reassessment.

The existing lender proposed a further bridge to avoid imminent penalties, which the client accepted.

In September 2018 a long-term solution to overcome the property value and just one-year’s trading numbers was proposed, which was completed with Assetz.

Everything against it

Crystal Specialist Finance managing director Jo Breeden said the case had everything going against it.

“Valuation problems, three bridging exits, a niche sector for lenders and only one year’s trading accounts, to name but a few issues.”

“The professionalism and dedication of commercial finance director David Parke to chase and secure a long-term financial result for the business highlights our expertise across many areas,” he added.

Assetz Capital director of intermediaries Damien Druce added: “The deal was in the balance for some time, but all parties remained focussed on achieving a positive outcome.

“In essence, and what is ultimately important to a broker, is that we took everything into account, mainly the management and the running of the business, and came to a commercial decision.

“We are delighted to have been able to help Crystal, their broker and the borrower when very few other lenders would.”