Fiduciam has completed a €10m loan to enable a developer to refinance its banking debt and fund the balance of construction costs.
The original funding for the three-block residential development came through a Spanish bank. Around the start of the Covid-19 pandemic in March 2020, the bank suddenly increased its pre-sale conditions significantly preventing further drawdowns against the facility. This put the construction at risk of being delayed.
Cristina Villen, business development manager for the Spanish team at Fiduciam, says “The problem that many developers are facing with Spanish banks has been exacerbated by the pandemic. Many are finding it increasingly difficult to get funding or, as in this case, existing loans are being withdrawn. Even during last year’s lockdown Fiduciam continued lending where many other institutional lenders pulled back, and it is gratifying to see some of the projects we lent to at the height of the pandemic now being successfully completed to the benefit of our clients and their employees. The €10m loan is for a great project in an up and coming, vibrant area of Barcelona. It would have been terrible if, because of the pandemic, it was not completed. Luckily the construction company was as determined as our client to see the property finished. This loan now gives the developer time to sell the units as we come out of lockdown and the property market opens up again.”
The borrower, an established Spanish development company, owned by a well-known UK developer, fortunately had a good relationship with its main contractor, who agreed to continue construction works without delay, provided refinancing would be in place, shortly after completion, to settle the balance of construction costs. This constructive and commercial approach by the main contractor allowed the 63 units and communal areas to be completed, ready for sale. The Fiduciam loan settled both the main contractor account and redeemed the Spanish bank loan in full.
This post has originally been featured in Property Wire.