Office Block Acquisition

A property company sought to acquire a multi-tenanted office building in Edinburgh's financial district for £4.2M. The building had 6 tenants on various lease lengths (2–8 years remaining), with a WAULT of 4.3 years. The occupancy rate was 85%, with one floor vacant. High-street banks were cautious due to the mixed lease profile and the vacancy void, offering terms at higher margins than the borrower's target.

We approached specialist commercial mortgage lenders who took a more nuanced view of the tenancy schedule. By presenting a detailed income analysis — including the reversionary potential of the vacant floor and strong comparable evidence for office rents in the area — we secured a 15-year fixed-rate facility at 70% LTV. The lender allowed the vacant floor to be excluded from the income covenant calculation for the first 12 months, giving the borrower time to let the space.

The acquisition completed within 6 weeks. The borrower let the vacant floor within 4 months of completion at a rent 15% above the assumed ERV, bringing the building to full occupancy. The 15-year fixed rate of 5.2% gave the borrower long-term certainty, and the asset's net yield post-finance exceeded 7.8%. The borrower is now exploring further acquisitions in the Edinburgh market.