Mixed-Use Conversion

An experienced developer identified a former office building in Birmingham's Jewellery Quarter with permitted development rights for conversion to 24 residential units, retaining the ground floor for commercial use. The total project cost of £4.9M required leverage beyond what a single senior lender would provide. The developer had equity of approximately £750K — enough for a 65% LTC senior facility but insufficient to cover the full costs without additional funding.

We structured a dual-tranche capital stack: a senior development facility at 65% of costs from a mainstream specialist lender, topped up with a mezzanine facility from a separate provider to bring total leverage to 85% of costs. The mezzanine was structured as a profit-share arrangement, aligning the funder's interests with the developer. Both facilities were co-ordinated with a single monitoring surveyor to minimise friction during the build phase.

The combined facility of £4.2M was drawn down over 16 months. The conversion was completed to a high specification, with the 24 apartments achieving rents 12% above initial projections. The developer retained the asset, refinancing onto a long-term BTL portfolio facility, repaying both the senior and mezzanine lenders in full. Net developer profit after all finance costs exceeded £800K.