A block of flats that is popular amongst students and healthcare workers in Ipswich is set to be rejuvenated, having been acquired by a specialist real estate investment business thanks to a third loan from Secure Trust Bank (STB) Real Estate Finance worth £3.9m.
Spring Court is a purpose-built block of flats, containing two to seven single occupancy rooms per flat for students and NHS staff. Located within walking distance of the University of Suffolk's Ipswich campus and Ipswich hospital, the apartments were acquired by Castleforge, a real estate investment firm in December 2023 after drawing down on a two-part investment and capital expenditure loan on a three-year term with STB Real Estate Finance.
The latest deal represents the burgeoning partnership between the two parties, and takes total lending from the bank to £33.2m, having struck another two deals with Castleforge in 2022 and 2023 worth a combined £29.3m.
A unique aspect of the lending facility is that all three deals struck so far have been split into two parts, with £20.9m of the £33.2m being for property investment, and the remaining £12.3m for capital expenditure. This follows Castleforge's long-term strategy of acquiring multioccupancy residential buildings and upgrading them using a dedicated capital expenditure loan facility to improve the quality and make the flats more desirable overall, before holding the buildings for long term rental yield.
Commenting on the loan arrangement and relationship with STB Real Estate Finance, Jayan Patel, Management Accountant at Castleforge said: "We are extremely pleased that we'll soon be able to transform Spring Court thanks to another deal with STB Real Estate Finance. This is our third deal with STB, and the continued support in our projects is something we value greatly. We are on a mission to boost quality around the rental sector, especially in large blocks that are in need of care and attention. Given that the demand for rental properties is increasing, our long-term objective is to improve the quality of mid-to-large apartment blocks to ensure renters and students can enjoy a greater standard of living.
"The team at Secure Trust Bank Real Estate Finance has completely understood our financing strategy in real estate. Few banks offer capital expenditure loans, and this route of financing has facilitated the successful refurbishment of multiple blocks of flats in key areas around the UK. The Secure Trust Bank team, with its specialist knowledge and experience in property investment, is the reason we have turned to them again."
The capital expenditure loan from Secure Trust Bank is a specialist product from the bank's product portfolio. It is arranged in a way that makes it much simpler, faster, and cost-effective for Castleforge to drawdown funds from. As the facility is agreed upfront, it minimises the paperwork, and once the remediation works on the properties have been completed, it allows the borrower to draw against an increased value in the property portfolio.
The Spring Court acquisition takes Castleforge's number of investments with STB Real Estate Finance up to a total of 12 multi-residential blocks across England. Other buildings that the investment firm has acquired include apartments in Liverpool, Birkenhead, Wirral, Castleford, Manchester, Norwich, and Birmingham. The total LTV across the portfolio is 60%. The term for all deals is expected to run until April 2027, at which point the properties will be refinanced.
Barry Gorton, Senior Relationship Director from STB Real Estate Finance, led the deal and he said: "It's been a pleasure to deal with Jayan Patel and Castleforge again. The opportunity to help upgrade and modernise apartments builds into the ethos and values we hold as a bank. We want to play our part in building a future where people can live comfortably, and we've got full faith that Castleforge is doing things the right way."
Capital advisory business Brotherton Real Estate introduced Castleforge and STB Real Estate Finance and has provided a key advisory role throughout the three transactions. Tanya Wolfe, Managing Director of Brotherton Real Estate, said: "We are delighted that such a strong partnership has been forged between the parties since the first transaction in 2022. Whilst the debt market has become more fragmented over the last five years, lending appetite remains buoyant for quality affordable private rented accommodation backed by experienced, institutionally owned sponsors and operating platforms."
Find out more about Secure Trust Bank Real Estate Finance.