MFS and Knight Frank Finance deliver bridging loan for hotel and spa refurb

The bridging lender was asked to support Knight Frank Finance’s client by providing a loan for the renovation of a spa hotel in North Warwickshire.

The hotel had been trading since summer 2021 and, despite setbacks related to the pandemic, had already increased in value after works were completed on the main residency.

Upon receiving the enquiry, MFS said it worked quickly to support the borrower, as many of the completed works had been privately funded.

The bespoke bridging loan provided the means for the hotel owner to pay contractors and fund the renovation of the spa.

The case was made more complicated by the property being Grade II listed, meaning renovation works had to adhere to set regulations.

There was also a complex company structure in place, with two clients situated outside the UK.

MFS said it was made aware of any complications from the start through underwriting immediately. In this case, a potential problem regarding the legal structure of the lease became apparent, but MFS was comfortable with the issue, particularly owing to the strength of the commercial asset and the loan to value (LTV) of the deal.

The LTV of 50 per cent also meant MFS did not require any additional security.

The exit strategy was to refinance through a challenger bank.

Daniella Campbell, mortgage consultant at Knight Frank Finance and the lead on this case, said: “MFS were able to consider all aspects of this case, where the majority of other lenders deemed it high-risk given the complex circumstances in the background. They were able to underwrite and issue credit-backed terms within 24 hours.”

Paresh Raja, chief executive of MFS, added: “This case brings many of MFS’s strengths to the fore. Firstly, our ability to manage complicated cases – with our experience and skill, we’re able to see the bigger picture and find ways around potential issues. Our communicative approach, keeping all stakeholders up to speed on what’s happening, also avoids any unwanted shocks and surprises.

“It was great to work with the esteemed team at Knight Frank Finance on this particular deal. We were delighted to deliver the commercial loan without any undue delays, meaning the client’s deadlines were met and renovations works on the hotel could continue unhindered.”