International property finance for properties worth €13.5million

THE SCENARIO

Many Enness clients seeking international property finance live, work and own property across several jurisdictions. I recently worked on a complex case for a married 67-year-old client who primarily lives in France but also owns a home in Monaco.

My client approached Enness International after hearing Enness’ Managing Director, Hugh Wade-Jones, speak at the Monaco Wealth Forum. There were several stages to my client’s requirement; he hoped to release equity from his home in France, remortgage and reduce the assets under management (AUM) on his Monegasque property, and secure a more competitive interest rate for both deals.

My client’s French property was valued at €5million, whilst his Monegasque property was worth €8.5million. Both had been recently renovated and were in prime condition.

However, there were several factors which complicated this case. Both properties were owned in his wife’s name, and the couples’ income came exclusively from seasonal lets. Both properties were also cross-border, so it was necessary to find a bank which could arrange mortgages in France and Monaco.

My client was also highly illiquid, meaning some otherwise suitable banks were ruled out because they would have required ‘fresh assets’. At 67, my client was several years into his retirement with no prospect of further income generation.

OUR SOLUTION

I therefore approached a private bank based in Luxemburg which has a strong wealth management department for the capital growth of AUM. My client was an ex-trader and was therefore very discerning regarding the management and composition of his discretionary portfolios.

Fortunately, the robust growth displayed by this bank’s growth orientated portfolios will more than likely allow him to repay the mortgage interest without requiring a further income or fresh capital. Essentially, the aim was to create a private banking relationship where the mortgage and AUM yields cover each other and costs the client nothing.

We were able secure a Monegasque mortgage with an extremely competitive interest rate and allow him to release equity in proportion to the increased value of the property since his initial mortgage. The amount of equity held in the property meant the bank were happy to fund his AUM; he didn’t have to bring any fresh assets to the table.

For his French property, I secured my client a rate of 1.6% over EURIBOR at 50% loan to value (LTV) with €1million AUM, on a total loan of €3million. I secured the same terms for the €4.5million loan on his Monegasque property, except with €1.5million AUM. I structured his loan into a renewable 5-year facility which would allow him to release a portion of his pledge as the properties increase in value. This was an excellent result and a very clear indication of how we can confidently understand and deal with complicated international property finance cases.

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