Lanark Student Living Limited is offering £809,278 debt investment via the Bond promoted by Crowd with Us for the development of 200-234 Mayfield Road, Edinburgh.
This project consists of the purchase of a site in Edinburgh and refinance of 2 x adjacent sites already owned by the developer.
The developer has agreed terms with Oblix Capital who will lend £6.195m. Crowd with Us will raise an additional £809,728 via the CWU platform.
The site has planning permission in place for 237 beds at a current valuation of £8.85m. Enhanced planning has been submitted to increase the size by 69 beds making a total of 306 beds, at an enhanced value with planning of £11m. The developer will be working with a Tier one contractor, Meldrum Construction Services with whom they have a prior relationship to build out the scheme.
Once built the projected total GDV for this scheme is £53m with £22m profit.
Once planning for the additional 69 beds is secured, the developer will refinance the scheme with Oblix Capital, the senior lender, at 65% LTV and repay the CWU Bondholders early (minimum term 6 months). Considering the developer has already received planning on the two adjacent sites, this is believed to be the most likely outcome.
Expected Valuation based on £36k per bed therefore 306 x £36k = £11m
65% of £11m = £7.15m. This should provide sufficient lending to pay out CWU investors
In the event that enhanced planning is not achieved there are four alternate exits:
- The developer is selling a £2.2m scheme with planning for 213 beds in Liverpool, and will use the expected proceeds of £1.03m to repay investors; or
- Commercial Head of Terms have been received for the refinance of a project in Sheffield for £1.65m. The current debt is £1.1m. Expected proceeds of £450k should be available to repay investors; or
- Offer has been received on Canning Circus project in Nottingham for £9.7m. The outstanding debt with AL Bank is £6.1m. Expected proceeds of £3.6m should be available to repay investors; or
- The development of the Edinburgh site will be carried out by Meldrum Construction Services, a Tier one contractor, the borrower has a prior relationship with, having recently contracted them to build out a 108 bed scheme for them 500m down the road . Investors may remain in the Bond for the full 12 month term whilst the project is completed and refinanced or sold.