Office Acquisition
Manchester

An investor was acquiring a vacant 5-storey office building in Manchester city centre. The property had been empty for 18 months following the previous tenant's lease expiry. The purchase price was £4.6m with estimated refurbishment costs of £1.2m — a total facility requirement of £5.8m. The investor planned a full refurbishment and repositioning to attract modern flexible workspace tenants. Their bank declined to lend on a vacant commercial property.

Vacant commercial property is one of the harder asset classes to fund — there's no income, the valuation is based on comparable evidence rather than yield, and lenders worry about void periods extending beyond the loan term. The building also needed a new EPC certificate (the existing one had expired) and the lift required replacement, both of which needed to be factored into the total project cost. The investor wanted to draw the refurbishment costs from the same facility.

We found a short-term lender on our panel who had specific appetite for vacant office buildings in city centre locations. They understood the Manchester office market and could see the value-add opportunity. The facility was structured as £5.8m covering the £4.6m purchase and £1.2m for the refurbishment works, released against completed stages. The lender valued the building on a gross development value basis at £10.7m post-refurbishment, giving a comfortable 54% LTV against the completed asset. The exit strategy was a refinance onto a long-term commercial mortgage once the building was refurbished and at least 60% let.