Pallas Capital has completed a £1,275,000 bridging facility for a residential development in Oxshott, Surrey, representing one of the lender’s first UK transactions since its January launch.
The 12-month loan, structured at 75% loan-to-value, refinanced both first and second charges on a property requiring refurbishment works. The borrower plans to exit the facility through a property sale once works are completed and the asset is marketed.
Project complications
The developer faced complications after a previous buyer withdrew mid-project, leaving the property stripped back and incomplete following refurbishment works the buyer had requested and funded. The withdrawal left the developer with an unmarketable asset whilst facing repayment demands from a second charge investor.
During underwriting, several previously undisclosed issues emerged that fell outside standard lending criteria. Pallas Capital structured a stepped rate solution, allowing the loan to complete at adjusted pricing to reflect increased risk, with a planned rate reduction once outstanding issues are resolved.
Valuation approach
The incomplete state of the property resulted in a lower current market valuation than initially anticipated. To deliver the required net loan amount, Pallas Capital advanced funds based on the property’s value once refurbishment works are completed, rather than its current condition. The structure included defined deadlines for works and marketing to protect the exit strategy.
The transaction required coordination between multiple parties, including the outgoing first charge lender and the second charge lender, adding legal complexity. Matthew Stayt at Seddons handled the legal aspects of the transaction.
Anna Thompson, originator at Pallas Capital, said: “From the outset, we understood the borrower needed more than capital—they needed certainty, speed and a partner willing to work through complexity. By maintaining transparent communication and taking a pragmatic underwriting approach, we were able to structure a solution that addressed immediate pressures while supporting a clear path to exit.”
The loan was funded from Pallas Capital’s own capital lines, with fund transfers coordinated directly once legal matters were resolved. The lender stated it will continue working with the broker and borrower throughout the loan term, supporting the completion of works and the eventual repayment on sale.