M7 Real Estate has secured a £20 million senior loan from Lloyds Bank to finance its purchase of a 47-acre regeneration site in the Midlands, Real Estate Capital has learned.
M7 recently completed the purchase of a business park site in Solihull known as ‘The Green’ from M&G Real Estate for £38.27 million. The site was bought on behalf of a newly-formed Jersey-based investment company, M7 Real Estate Investment Partners IV.
Lloyds is understood to have provided the investment loan to a 53 percent loan-to-value, priced at 285 basis points over three month Libor. The two-year loan can be extended to five years and amortises.
In addition to the senior finance, the purchase was part-funded through the issue of a £10.7 million five-year bond, arranged by M7. The privately-placed bond is listed on the Channel Islands Stock Exchange and takes the debt element of the deal to around 80 percent LTV.
M7 REIP IV has also raised £10.7 million of equity from a mix of institutional, family office and high net worth investors and including a co-investment by M7 of £2.35 million.
M7 is planning new development at The Green and the choice of Lloyds as the provider of the initial senior debt is understood to be due to the bank’s ability to provide development finance to clients.
Commenting on the acquisition of The Green, M7 chairman Hugh Ellingham said: “This is a significant acquisition for M7 as it represents our first major brownfield regeneration project and will allow us to fully use our team’s planning and development skills.
“While The Green already produces a healthy level of income from the existing buildings, it also offers further upside through the existing outline and detailed planning consents, and our confidence in its potential is underlined by our co-investment in the project,” he added.