In March 2022, GRE Capital provided an acquisition and refurbishment loan secured against an office building in Farringdon, London. The loan was structured for a joint venture between a European family office and a project manager, with a conservative Loan-to-Gross Development Value (LTGDV) of 65%.
However, in September 2022, the UK government’s mini budget triggered a sharp rise in interest rates, significantly impacting investment yields. As a result, the borrower, despite securing planning permission for enhancements, opted not to proceed with the development.
With the loan still within its term, GRE Finance adapted its strategy by transitioning the interest structure from capitalised to serviced, providing the borrower time to sell the asset. The borrower engaged a prominent City investment agent, yet after six months, a sale above the loan amount had not been secured. At this stage, GRE made the strategic decision to enforce its security.
Following an extensive review, GRE determined that the asset had been mis- marketed and promptly appointed a more suitable agent. As a result, the asset was successfully sold within two weeks of GRE assuming control, returning 100% of both capital and interest to investors and delivering a double-digit return.