Financing £600,000 Children’s Nursery Acquisition

Recently, our team was approached by a client who had successfully operated a children’s nursery for many years before voluntarily leaving the sector. However, having spotted an opportunity too good to ignore, they recognised a need for financing and knew that Rangewell could help them negotiate the most favourable deal. 

The opportunity in question focused on buying a disused £400,000 commercial building and converting it into a children’s day nursery. The building was already located in a high-demand area, had very little competition and was built to a high standard – all that was left was to raise an additional £150,000 to fund the conversion into a 60-place nursery. 

Facing over £550,000 in costs but knowing the potential rewards promised by the completed nursery project, the client asked Rangewell to help them choose the right lender and negotiate the best deal possible. 

Shaping a more successful approach to finance

Our client had experience working on their side, with lenders typically favouring any applicant demonstrating a successful history in ownership or management. This is even more important in niche care sectors, with lenders expecting you to show a strong history of profitable ownership and quality Ofsted ratings. 

This client had already owned a nursery in the past and could provide appealing figures around profits and Ofsted reports, which meant lenders were more receptive to their application. However, they also wanted to raise development finance to fund the conversion – where the loan is instead based on the property's value. 

We worked with the client to help them create a robust business plan that clearly demonstrated the value of the development project and the financial potential promised by the completed nursery. To find the best offer, we then narrowed down choices from the vast lender’s market to find providers with experience in property conversions AND children’s nurseries. 

Leveraging experience to improve lender offers

Thanks to the client’s history in nursery ownership, lenders were receptive to their application – but the additional effort from the client and our team helped attract the best offer. 

Before development, the client worked on marketing the future nursery to parents and building a list of interested parties. This helped demonstrate the value of the completed project to lenders and improve the offer. 

Thanks to the client’s work and Rangewell’s expertise, we identified a lender offering a £600,000 loan over 24 months at a low-interest rate. The loan was secured against the value of the property.

The client registered the nursery with Ofsted as soon as possible, meaning that upon completion but before it had even welcomed its first child, the nursery was valued at £900,000 - meaning the client had essentially gained £300,000 on their investment before the business had started trading! 

This type of opportunity proves the value of finance to ensure your development project reaches its full potential. Provided you have the industry experience to spot the right conversion opportunity, you can buy property, convert it for use in your sector and generate immediate value. 

Whether you’re a nursery manager looking to step into ownership or an existing owner looking to grow, Rangewell can help you fund property development projects for nursery conversions. Contact us today to discuss your requirements and see how we can help.