Raising £2.7m Children’s Care Home Loan To Buy Leased Premises

Most mainstream lenders make loan offers based on the value of your tangible assets – which means you’re limited to what you can borrow. Even if you run a successful business that generates strong profit, you might find that lenders are unwilling to offer the total amount you need. 

Recently we were approached by a children’s care home group that needed to raise enough cash to purchase the freeholds of the premises they currently leased. Not only was this a strong move for their business, it was also a recommendation made by Ofsted. Because lenders would only lend against their owned assets, the group was struggling to find the capital needed to purchase the freeholds and further expand their business. 

Fortunately, they approached Rangewell for help. 

Why was there a problem?

The group has a mixed portfolio for its care homes, with some properties owned as freeholds and others leased. The leased properties carried a variety of lease conditions and different renewal dates, which made it harder for the group to plan any future growth as they had to renegotiate each lease individually. 

To deal with this, they began considering purchasing the freeholds for each leased property. Ofsted supported the move as it would help the group have more concrete long-term premises. With their own internal goals now aligned with Ofsted’s recommendations, the care group needed to find the funds required. 

The leased properties were valued at £2.7m, which meant the care group needed a lender willing to finance that amount in order to complete the transaction. Unfortunately, the banks they approached were only willing to offer loans against the business’ fixed assets. This meant a shortfall in required funding. 

Why we were able to help

Rangewell knows the lending market inside and out. We’re able to quickly identify which lenders would offer borrowing based on a business’ value rather than on their fixed assets. In this case, we helped the care group establish a baseline valuation for the business and then approached lenders to explain their plans.

With our team on their side, the group was able to secure the full £2.7m required to purchase the freehold properties, with a lender basing the offer on the projected value of the business rather than the bricks and mortar sum.

This loan not only helped the client raise the money they needed, but also gave them security of tenure and freed them from future lease negotiations, giving them much-needed long-term visibility over their growth plans.  

Purchase your care home freehold

If you lease your care home or commercial business premises, you may be able to purchase it outright with our help. Speak to Rangewell today to see how we can help you borrow money against your business’ performance rather than your property portfolio.