Refinancing French Riviera property portfolio

Refinancing French Riviera property portfolio

Since 2007, worldwide interest rates have been near historic lows and the ongoing coronavirus pandemic has added further downward pressure. Indeed at this moment in time Eurozone base rates are flirting with negative territory and the Bank of England recently reduced UK base rates to 0.1%. As a consequence, we are starting to see an increase in demand for refinancing French Riviera property and in some cases extensive property portfolios. This makes perfect sense but not all ultrahigh net worth/high net worth individuals are cash rich.

We were recently approached by an expat living on the French Riviera who had retired from his business more than a decade ago. Previously a lively and active entrepreneur he sold his business and decided to retire to the south of France. If you cast your mind back to 2007/8 these were dire times for property markets and economies. So, with a sizeable cash injection this individual set about a long-term plan to acquire several trophy assets across the region. Fast forward to 2020 and with interest rates at historic lows it makes sense to try and refinance this huge multi-million euro property portfolio.

Client scenario

In the immediate aftermath of the 2007/8 worldwide economic collapse we did see a significant fall in luxury property prices. This prompted many cash rich individuals to heavily invest in trophy assets – especially those available across the French Riviera. When approached by a client who effectively invested his life savings more than a decade ago, funding a €60 million property purchase program, but with no current fixed income, we thought this may prove challenging.

The client was a UK national living on the French Riviera but like 70% of those acquiring property in the region, he was non-resident in France. This can create an array of issues especially with traditional lending organisations but there was more to follow. As an extremely successful entrepreneur he had decided to retire early and now had no fixed income, a limited amount of savings and above all a luxury lifestyle to maintain. When he first approached us he had an existing loan with a French bank but it was proving difficult to arrange the refinancing of his properties. Indeed under the French bank’s affordability criteria his asset rich, cash poor status made it impossible to obtain affordable funding.

So the scenario was as follows:-

Client: UK national
Resident: UK
Income: No fixed income
Savings: Minimal
French Riviera property portfolio: €80 million
Fundraising: Refinancing and equity release
LTV ratio: Maximum
Term: 2 to 3 years

When we sat down and discussed the situation in more detail with the client it became obvious that any refinancing of his property portfolio would be relatively short-term. He advised us that he was actively looking to sell his property investments although a degree of short-term funding would relieve any immediate pressure. So, we had a number of issues to take into account although we were aware of the client’s ultimate goals.

Issues to address

As we touched on above, around 70% of the largest residential properties across the French Riviera are owned by non-residents in France. It was fairly obvious from the outset that a traditional French/UK bank would be unlikely to offer competitive terms, if any terms, due to the client’s income and residency status. We were therefore faced with a relatively challenging environment whereby we had to maximise the LTV ratio while ensuring the client was able to fulfil their repayment obligations in the short term – prior to property sales. Once the client’s requirements were clear we then set about creating a bespoke funding structure which would dovetail with their personal financial situation.

The requirements were as follows:-

French property portfolio value: €80 million
Funding: Refinancing/Equity release
Loan facility: 2 to 3 year duration
LTV required: Maximum
Income: No fixed income
Savings: Minimal

While the client was classified as asset rich but cash poor, this is all relative to the luxury lifestyle which they enjoyed after business success. We knew it would be challenging to refinance the existing loan, inject a degree of equity release all within an affordable bespoke funding structure. The fact that the client was in the process of selling their property gave us an endgame/exit which would prove to be very important when discussing potential terms.


It was fairly obvious from the start that we would need to look towards the private banking/niche lending sector. The official lending criteria used by the client’s current French bank were not conducive to a refinancing due to the clients limited income and limited savings. This opened the door to a potentially new and mutually rewarding relationship with a private bank/niche lender. We know from our experience that many private banks/niche lenders will afford a significant degree of flexibility when servicing new clients. Unlike traditional retail banks they tend to take a long-term view on new clients. As this client had significant assets and was looking to liquidate them, this introduced a further financial carrot.

The exact details of the funding solution were as follows:-

French property portfolio value: €80 million
Funds raised: €48 million
LTV ratio: 60%
Existing loan repayment: €36 million
Equity release element: €12 million

The funding breakdown was as follows:-

Interest payments: One year of interest paid to bank on drawdown of funds
Mortgage term: 2 + 1 year mortgage facility
Interest rate: 1.25%

While the figures speak for themselves, the fact that the client would be extremely liquid after the transaction helped to overcome a number of challenges. Indeed we were well aware that the private bank who took on the funding did so on terms which were relatively unrewarding but gave the potential to expand the relationship. We have dealt with many private banks in years gone by that have been willing and able to accommodate attractive introductory terms. These come with the goal of building a long-term relationship. The simple fact is that many high net worth individuals will stay with lenders willing to be flexible and accommodate their often unique wider financial requirements.

It goes without saying that the client was extremely happy. They had refinanced their property portfolio, giving more time to secure an orderly sale of their property assets, while withdrawing sufficient equity to cover the cost of their luxury lifestyle.

What can Enness do for you?

Many people are not aware but Enness was born on the day that Northern Rock collapsed in the UK, amidst the 2007/8 financial crisis. So, it is safe to say that we have come to expect the unexpected and are certainly more proactive than reactive. We also have a very strong presence in the French Riviera and as such have a particularly in-depth understanding of the market and the funding available. As a consequence we are regularly approach by UK nationals looking to acquire property in the region. Indeed, with UK and European base rates now at historic lows there is growing interest in refinancing and equity release.

This particular case study was relatively challenging because the client had no fixed income, limited savings but was asset rich. So, it was a case of finding a private bank that would facilitate a refinancing/equity release on favourable terms with minimal client income. As we have access to more than 300 lenders across the globe, we have some extremely strong relationships with private banks and niche lenders. We also know that many private banks are very flexible in their approach to ultrahigh net worth and high net worth individuals. Indeed, many are willing to offer very attractive introductory terms in the hope of expanding their relationship further down the line.

If you ever find yourself in a similar situation we would welcome the opportunity to discuss your funding requirements in more detail. We are able to present an array of different solutions, often thinking outside of the box, all based on real-time market rates. This allows you to compare and contrast not only cash flow but short, medium and long-term financial liabilities. Maximising funding is the key but this must be done within the constraints of the client’s financial resources.

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