Refurbishment finance
Deal box · EUR 1M to 50M+
Borrowers · Light and heavy refurbishment
What refurbishment finance does.
See our approachOne facility can cover buying the building and the refurbishment that follows, so the project starts with all of its financing agreed.
The works budget is released in tranches as each phase is signed off, keeping the advance in step with what has been built.
A tenor set by the works programme and the exit, within a deal box of EUR 1M to EUR 50M+; exceptions are considered case by case.
Two values frame every refurbishment: what the building is worth today and what it should be worth once the works are complete. Investors read the cost plan against both, test the contractor and the programme, and look for an exit (a sale, a letting or a refinancing) that the finished building can support.
Watson AM does not lend. We assess the building and the works, structure the facility and its security, prepare the file and present it to the investors in our network it suits. Each investor makes its own assessment and the funding decision.
Refurbishment timings.
Refurbishment finance often has to be ready for a purchase date or a contractor’s start. Our side of it runs as below; the investors’ own checks, the valuation and the review of the cost plan set the rest.
Enquire
The building, the refurbishment works and their cost, the amount sought and the exit. A short brief is enough to begin.
Read
A principal reads the brief, checks it against the deal box and asks for anything missing.
Terms
Indicative terms in writing, with the security and the drawdown schedule for the works set out.
Investors decide
Each investor runs its own checks and decides; 58 days is our average from mandate to funding.
Indicative terms are subject to investor approval, due diligence and final documentation. Funding is not guaranteed.
The scope of the refurbishment sets the structure.
Light refurbishment, heavy refurbishment and listed buildings are read differently. Pick one to see what investors test.
Light refurbishment finance pays for works that leave the structure alone: finishes, kitchens and bathrooms, heating and wiring brought up to date. The building can often stay in use while the works run, which takes months rather than years, and the budget may be drawn in one or two tranches.
What investors test
- Cost plan
- Value after works
- The exit
Heavy refurbishment finance covers structural work, a change of use or a conversion, such as offices into apartments or a farmhouse into several homes. Consent and a building permit normally come before the first drawdown, and the works budget is released in stages against a monitoring surveyor’s sign-off.
What investors test
- Permits in hand
- Contractor and price
- Drawdown schedule
Heritage property finance is for older and listed buildings, where the conservation authority approves the works and the records can matter as much as the masonry. Ownership, past permits and the land register entries are checked before investors see the file.
What investors test
- Conservation consent
- Title and ownership trail
- Specialist contractors
From the case files.
A Hellerup villa, bought and restored in one facility.
Facility
CHF 1'835'000
purchase and refurbishment
Loan-to-value
70.6%
Term
18 months
Term sheet
2 weeks
An experienced local developer bought a villa in Hellerup, north of Copenhagen, and renovated it fully. The purchase and the refurbishment sat in a single facility, so the project ran on one set of terms from the day it started, and the facility has since been repaid.
A first-rank mortgage and a personal guarantee secured it. In Oslo, a residential building restoration (CHF 1'270'000 at 25.4% loan-to-value) was funded once a tangled ownership trail had been sorted out. See both in the case files.
Refurbishment questions.
The questions developers and owners ask first about refurbishment finance. If yours is not here, write to us and we’ll take it from there.
What is refurbishment finance?
Refurbishment finance is a secured facility that pays for works on an existing building: a renovation, a conversion to a new use or a restoration. It can fund the works alone or the purchase and the works together, with the works portion released in stages as each phase is completed. Watson AM arranges refurbishment finance across Europe and presents each facility to the investors in its network it suits.
What is the difference between light and heavy refurbishment finance?
Light refurbishment finance covers works that leave the structure as it is, such as finishes, kitchens, bathrooms and services, and rarely needs planning consent. Heavy refurbishment finance covers structural works, a change of use or a conversion; those usually need consent and a building permit before the first drawdown, and the budget is released in more stages against a surveyor's sign-off.
Can the purchase and the works be funded in one facility?
Yes. In Hellerup, north of Copenhagen, a single CHF 1'835'000 facility covered both the purchase of a villa and its full renovation, at 70.6% loan-to-value over 18 months. The facility has since been repaid.
How much can I borrow with a refurbishment loan?
Our deal box runs from EUR 1M to EUR 50M+, with exceptions considered case by case, at up to 75% loan-to-value. Investors read two values, the building as it stands and the building once the works are done, and the cost plan has to bridge the two. Part of the works is usually met from the sponsor's own equity.
How are the funds for the works released?
In stages. The facility sets a drawdown schedule against the cost plan, and each tranche is released once the works it pays for have been signed off, typically by an independent monitoring surveyor. Where the facility also covers the purchase, that part is drawn at completion.