£364k commercial bridging loan funds seaside hotel-to-HMO conversion plan

"By taking a pragmatic view on valuation and structure, and working closely with all parties involved, we were able to complete the transaction within the required timeframe and support the acquisition"
- Heather Mitchell - Recognise Bank

Recognise Bank has completed a £364,000 commercial bridging loan to support the acquisition of an 11-bedroom hotel in Bournemouth, stepping in after a previous lender withdrew from the deal at a late stage.

The borrowers are a couple who run separate businesses in the car and beauty industries and have been building an investment property portfolio in recent years. Introduced by broker Ian Monks of Commercial Mortgage Solutions, the 12-month facility with retained interest was completed at 70% LTV.

The property is a currently closed B&B in a seaside location where overnight holiday accommodation is in oversupply. The vendors had run the hotel as a lifestyle business, leaving limited trading history and no formal accounts available for review.

Following completion, the borrowers plan to apply for planning permission to convert the property into a large HMO, with a focus on renting to young professionals. In the meantime, they intend to reopen and trade the B&B to capture seasonal demand and keep the property in active use.

With completion at risk after the original lender pulled out, Recognise Bank accepted a readdressed valuation and used title indemnity insurance to facilitate the transaction, finalising the loan within 22 working days from application.

"This case required a considered approach given the lack of trading history and the proposed change of use," said Heather Mitchell, lending manager at Recognise Bank. "The borrowers had a clear plan for both the short-term operation of the asset and its longer-term repositioning, which provided a solid basis for the lending decision."

Mitchell added: "Timing was a key factor, particularly with the previous lender withdrawing at a late stage. By taking a pragmatic view on valuation and structure, and working closely with all parties involved, we were able to complete the transaction within the required timeframe and support the acquisition."

"This was a time-sensitive case where the clients were at risk of losing the property following a change in position from another lender," said Ian Monks, broker at Commercial Mortgage Solutions. "It was important to find a lender that could understand both the immediate trading plans and the longer-term strategy for the asset."

Monks added: "The team at Recognise Bank were clear and responsive throughout, working collaboratively to ensure the deal progressed efficiently and completed within a tight timeframe."

Recognise Bank continues to support property investors with flexible bridging finance across a range of asset types, including cases involving change of use and transitional assets.