The Ironworks, Backbarrow
48-unit part complete conversion
London Belgravia were approached by Linchpin Ltd to help acquire 10-year structural warranties on a part-complete site, due to the initial developer becoming insolvent. The developer had been Reno Global Limited and the funder Investec Bank.
The sole and main creditor of the company, Investec Bank, appointed Duff and Phelps, as administrators. The sole asset of Reno Global Limited was the property at Backbarrow, which due to the insolvency of Reno, lay part-complete from 2007, with two live-work blocks partially delivered, along with two office buildings. The strategy was (funded and supported by Investec) to finish the Backbarrow site, enabling a part recovery of the Banks debt, hence the requirement for a 10 year structural warranty (Latent Defects Insurance).
From the offset, the market was limited, due to it being a part complete project and having been left dormant for such a long period of time. Essentially the existing buildings were at shell finish, as work had suspended in 2008. There were 17 terraced units and 5 workshops. The plan was to provide five new staircase towers and split the terraced units both horizontally and vertically to create a mix of 1, 2, 3 & 4 bedroom apartments, creating 43 residential units, with the workshops being converted into 5 affordable homes.
Our client informed us that they had tried to get a NHBC quote but with it being part complete we knew they would decline to provide one. Further to this they had received, a quote from LABC for £180,000.00, but a key point was that none of the previous works were going to be insured. Only new works were insured, so while they were insuring the full reconstruction cost, only half the site was insured.
We then approached other providers in the market, with indicative pricing coming back between £100,000.00 and £150,000.00. ICW emerged as the front-runner on price with a quote of £109,000.00. Notably ICW were also willing to take on all previous works as well as placing the policy in the contractor’s name – Barnfield Construction. This was fundamental as once the site was finished the bank planned to close Reno Global, however with latent defect polices there is a 2 year defect liability period where the developer or contractor is responsible for any defects caused to the structure. London Belgravia ensured that ICW placed the policy in the name of Barnfield Construction, so that Investec had a complete exit from the development, once all the units were had been sold.
At the last minute, another warranty provider presented a quote to the client for what seemed an attractive £90,000.00. The solicitors acting on behalf of Investec (Hill Dickinson) approached us to help explain the difference in price and policy.
The main reason the other warranty had an inferior offering was due to their underwriter being based off shore and had not been stress tested; whereas ICW was providing capacity from an A-rated Lloyds of London underwriter.
Hill Dickinson carried out all the necessary due diligence, and ultimately agreed that the ICW quote was far superior. Therefore, in summary we had been able to show our client a saving of £70,000.00 whilst also obtaining a first rate product.
Charles Wilson (Head of Manchester Office)
T: 0161 537 0270