The Intermediary – August 2025 - Flipbook - Page 58
SPECIALIST FINANCE
Opinion
Unlocking capital for
complex ownership
B
ridging finance is
oen associated with
speed and simplicity.
But for many
brokers, especially
those working with
entrepreneurial clients, the true value
of bridging lies in its ability to navigate
complexity. That’s particularly
relevant when dealing with layered
ownership structures, such as when
property and trading activity are split
between different entities.
One common example is the
PropCo/OpCo arrangement, where
one company owns the property (the
PropCo) and another uses it to run a
business (the OpCo). While this setup
can be efficient from a commercial
perspective, it oen creates hesitation
among traditional lenders.
The sticking point
The main issue is alignment. A lender
might be asked to secure lending
against a property owned by one
entity, while the income that supports
repayments comes from another.
That can raise questions about
cashflow, control and risk,
particularly if the operating
company’s success is closely tied to the
value of the asset, as in care homes or
leisure businesses.
Where these structures involve
shareholder agreements, group
guarantees, or unclear financial
relationships, it becomes harder for
a mainstream lender to assess how
a loan will be repaid. That lack of
clarity can stall even the strongest of
applications.
Experienced bridging lenders are
oen more comfortable assessing
these dynamics. They will still want to
see how the income supports the loan,
how the structure works in practice,
and what happens if one part of the
setup fails, but they are typically
far beer suited to engage with the
specifics and work with brokers to
shape a viable solution.
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The Intermediary | August 2025
Bridging can also be useful
when a client needs to raise capital
across a portfolio, rather than for
a single asset. That might include
clearing existing debt, refurbishing
units, or releasing equity for wider
business plans.
In a recent example, StreamBank
was approached to help a Londonbased client raise capital against a
commercial warehouse valued at
£945,000. The property was owned by
a PropCo, while a related OpCo paid
rent to it. There was a small mortgage
of £70,000 on the asset, but the client’s
goal was to repay that and use the
surplus to fund refurbishment works
on four residential flats elsewhere in
their portfolio.
The structure was relatively
complex, but we were able to
proceed based on the strength of the
underlying business. By this I mean
that management information showed
consistent income and a clear flow of
funds between entities.
The asset had strong value, and the
borrower had a solid track record.
That gave us confidence to offer
funding at 65% of the market value,
subject to existing tenancies, with
the client planning to exit the facility
through a commercial term refinance.
Offering up the details
Cases like this aren’t just about having
the right asset or the right rate. What
allowed the deal to move forward
was the quality of the information
provided: up-to-date accounts, a full
picture of the property portfolio,
clarity on company ownership and
structure, and a realistic exit plan.
When lenders have this level of
visibility, they’re more likely to
offer higher leverage or fund more
ambitious projects.
It also means that credit decisions
can be made with greater confidence,
even when the application doesn’t
follow a typical format. This is
particularly important for brokers
ROZ CAWOOD
is MD, property finance
at StreamBank
handling clients with mixed-use
holdings, company groups, or plans
that involve multiple assets. The more
in-depth the information provided,
the more likely the lender is to support
those goals.
It’s easy to think of bridging
as a solution for time-sensitive
transactions, which it oen is. But
in cases like this, its real value lies in
making deals work when mainstream
lenders won’t. That might involve
repurposing equity from one site
to invest in another, or helping a
business unlock capital without
needing to restructure its operations
or assets.
Legal complexity can delay progress
in deals involving company groups,
especially where land registry
updates, past transfers, or historical
guarantees are involved. In these
cases, title insurance can play a useful
role. By covering specific legal risks, it
can give both lender and borrower the
comfort to proceed while legal maers
are finalised, rather than waiting
for them to resolve. Cases involving
PropCos and OpCos are becoming
increasingly common, particularly
among experienced investors and
business owners. For brokers, the
challenge comes in finding a lender
that can engage with the structure
rather than retreating from it.
Bridging isn’t always about moving
quickly. Sometimes it’s about
unlocking liquidity from a structure
that makes sense commercially, even
if it doesn’t tick every box on a high
street lender’s checklist. In the current
market, that kind of flexibility can be
the difference between standing still
and moving forward. ●
