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Refinancing commercial property involves more than replacing one loan with another.
Your new lender needs to be satisfied that the property provides acceptable security. Its lawyers may investigate the title, leases, planning position and other property matters and require problems to be resolved before funds are released.
We have a large and highly experienced commercial property team acting for property owners, businesses, investors and developers in London and throughout England and Wales.
Our commercial property lawyers regularly deal with financed acquisitions, refinancing and property security.
That experience matters because a significant part of the job is anticipating what a lender is likely to require rather than waiting for its lawyers to raise problems shortly before completion.
The strength of our wider firm is also relevant to refinancing. Where required, our property lawyers can work with banking and corporate specialists on facility agreements, guarantees, debentures, financial covenants, SPV structures and other aspects of the funding.
For more complicated transactions we can also draw upon construction, planning, tax, insolvency and dispute expertise.
This provides access to a broad commercial legal team while our charges generally remain at competitive mid-market rather than City-firm levels.
Our fees depend principally upon the work involved rather than simply the amount being borrowed.
A refinance of one straightforward property is very different from refinancing a multi-let building or portfolio held through several companies.
Relevant factors include the number of properties, title complexity, occupational leases, existing security, the new lender's requirements and whether additional corporate or banking work is needed.
We will normally establish the likely scope and provide a clear fee proposal at the outset.
It is also worth considering legal cost in the context of the financing as a whole. Delayed completion, an unresolved title issue or accepting inappropriate financing documentation can cost considerably more than the legal fees involved in dealing with the transaction properly.
Much of our work involves getting the property into a position where the lender is prepared to release the money.
Depending upon the transaction, we may need to:
investigate and report on title, including restrictions, covenants, easements and other matters affecting the lender's security;
review searches and property information required by the lender;
check occupational leases and matters affecting rental income;
resolve title defects or missing rights which concern the lender;
investigate relevant planning and use issues;
deal with existing mortgages and charges and arrange their discharge;
satisfy property-related conditions precedent;
deal with property security documentation;
coordinate with the lender's lawyers, valuers and other advisers;
complete the refinancing and movement of funds; and
register the new charge and deal with post-completion requirements.
The requirements vary between lenders and properties.
A refinancing can become frustrating when an issue which has existed for years suddenly matters because a new lender will not accept it.
Examples include inadequate rights of access, missing documents, title restrictions, planning discrepancies, defective leases or undocumented alterations.
An experienced commercial property lawyer should identify likely lender concerns early and establish what actually needs to be done.
The solution might involve obtaining documents or consents, correcting the title, varying a lease, securing indemnity insurance or demonstrating to the lender why an issue does not materially affect its security.
The objective is to resolve genuine obstacles without allowing unnecessary technical issues to derail the financing.
Where a property is let, the leases may be an important part of the lender's assessment.
The lender can require information concerning rent, lease terms, break rights, rent reviews, repairing obligations, arrears, guarantees and variations or side agreements.
We can review the occupational documents, identify issues likely to concern the lender and deal with requirements raised during the transaction.
For multi-let properties, organising this information early can materially improve the process.
Portfolio refinancing requires more coordination.
Different properties may have different titles, leases and historic issues. They may be held through several companies or SPVs and subject to existing charges which need to be released.
The size of our commercial property practice enables us to resource substantial portfolio work and coordinate the property aspects across multiple assets.
Our corporate and banking lawyers can work alongside the property team where the financing also involves corporate security, guarantees, debentures or restructuring.
The property security is only one part of a commercial refinancing. Borrowers may also need advice on the terms upon which the money is being advanced.
Loan documentation can contain financial and operational covenants which affect the borrower throughout the term of the facility. These can restrict further borrowing, disposals or distributions and impose financial tests and reporting requirements.
Where appropriate, our banking and corporate lawyers can advise on the facility agreement, guarantees, debentures and other financing documents alongside the property work.
Owners frequently refinance because a property has increased in value or existing borrowing has reduced.
Released equity might then fund another acquisition, development, investment in the business or other purposes.
We can deal with the new lender's property requirements, repayment of the existing lender and registration of the new security. If the funds are being used for another property purchase, our commercial property team can also handle that acquisition.
A property may be refinanced after development or refurbishment when short-term development or bridging finance is replaced by longer-term investment funding.
The new lender may require evidence concerning completion of the development, planning, building regulations, warranties, leases and other matters which were less relevant when the original funding was obtained.
We can identify these requirements and coordinate the legal work needed to move from development funding to longer-term finance.
A straightforward refinance can proceed relatively quickly. A portfolio, complex ownership structure or property with title or lease problems will normally require more work.
If you have a target completion date, instructing us early gives us more opportunity to identify lender requirements and resolve problems before they become critical.
If you are considering refinancing a commercial property or portfolio, early legal involvement can help establish what the lender is likely to require and provide time to resolve issues before they threaten completion.
Contact our commercial property team to discuss the proposed facility, properties involved and your intended timetable.
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We have a mix of employed lawyers and highly experienced Consultants. The lawyers below may not be all lawyers offering this service. You can find Consultants who specialise in this area of law by using the search function below.
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