Arc & Co Secures £7.3 Million Loan for Glasgow Office Acquisition

Arc & Co., a prominent specialist in debt and equity advisory, has successfully arranged a funding package of £7,322,500 to support the acquisition and strategic enhancement of a multi-tenanted office property in central Glasgow. This three-year facility is designed not only for the purchase but also to fund asset management strategies aimed at maximising the property’s long-term value.

The transaction presented unique challenges due to the asset’s short weighted average unexpired lease term (WAULT) of less than 12 months. Typically, such a factor would lead to the use of short-term bridging finance at higher rates until rental income stabilises. However, Philip Kay, Director at Arc & Co., identified that the entry price, which reflected a high net initial yield, provided a significant buffer to manage the debt even if some tenants opted to exercise break clauses or allow their leases to expire.

Innovative Financing Strategy

Philip focused on establishing a robust position with the lender, in conjunction with a comprehensive asset management strategy. This approach enabled him to secure long-term stabilisation funding rather than resorting to expensive bridging finance. The search led to a lender that specialised in competitive stabilisation funding and recognised both the property’s prime location and the client’s value-enhancing business plan.

Notably, the sponsor’s joint venture equity partner is a well-established developer from New York, indicating a renewed interest from US equity investors in the UK regional office market. The financing was executed with a loan-to-value (LTV) ratio of 67.5% and featured a market-leading margin of 4.25% over three years. This margin is particularly competitive, given the short WAULT associated with a regional office property.

“This case demonstrates the value of identifying lenders who truly understand both the asset and the borrower’s strategy,” said Philip Kay. “The lender’s appreciation of the building’s fundamentals and the sponsor’s track record enabled us to secure stabilisation funding where others might have only been able to offer bridging terms.”

Arc & Co. remains committed to financing a diverse range of projects throughout the UK, leveraging its expertise to provide tailored solutions for clients navigating the complexities of evolving market conditions.