Shojin has returned £6m to investors after refinancing an existing loan facility for a large development in Leicester.
A total of £3.1m in capital and £2.9m in interest has been paid back following a restructuring and refinancing of the scheme, delivering a 19.2% annualised return for investors.
“This is yet another example of a successful exit and strong returns offered to our investors and demonstrates how we work closely with reputable middle-market developers to help them achieve their desired plans,” said Jatin Ondhia, CEO of Shojin.
“Importantly, Shojin is helping middle-market developers scale and deliver essential UK housing while also providing a rapidly growing global investor base with a choice of excellent opportunities, providing outsized returns, with relatively low minimum investment amounts.”
The new 12-month bridging loan facility has enabled the developer to deliver the scheme in two parts and optimise the cost of construction. Building work has started on one part, which is being refinanced separately, while the other part is postponed for 12 months and placed on a bridge loan. This provides the developer with sufficient time to value engineer the second part of the scheme and commence construction in 2023 in order to meet the 2025/26 academic year.
Given the rising cost of construction and sheer size of the development, the developer determined that it would be better to build the remaining site in three parts with regional contractors rather than use a tier 1 national contractor. This technique will save almost £8m. He intends to replace the bridge loan with development funding next year, which Shojin may participate in if required.
The development in the second part of the scheme is Purpose Built Student Accommodation (PBSA) for 271 units, 567 beds, 10 communal areas, 48 car parking spaces, and a ground-floor retail unit.
Leicester is home to two major universities – the University of Leicester (15-minute walk) and De Montfort University (7-mins walk). According to Homes England Student Accommodation data, there were 38,520 full-time students studying in Leicester, with 14,635 students studying at the University of Leicester and 23,895 at De Montfort University.
The 12-month junior bridge loan helped the borrower with the purchase of a Lakeside Business Park site in Staines-Upon-Thames, which comprises 74,021 sq ft of existing office accommodation, decked car park for approximately 150 cars and a man-made lake. They have obtained planning permission under permitted development rights to convert the existing office space into residential and applied for full comprehensive planning permission for the remainder of the large site.
Due to the strong collateral and low loan-to-value, this project presented attractive returns relative to the level of risk, with investors receiving 15% per annum, increasing to 17% per annum for investments above £100,000.