Portfolio Case Study 2
The Development
Refinancing of the portfolio following acquisition of the former owning company. New loan finance of £52m was to be insured.
The problems
The size of the portfolio (15,000 titles) made conventional due diligence impractical in terms of time and cost. Initial examination by the client and by First Title showed that the property records required substantial work to make them fit within the client's operating system and, more importantly, that a substantial proportion were not registered in the correct name of one of the owning entities. Corrective work would be done, but the time required to complete this would seriously delay draw-down of new financing. In addition, the standard First Title policy documentation did not address all of the issues raised by the new funder.
The underwriting
Because of a history of previous transactions with the same investor, First Title was able quickly to assess how well the registration problem would be tackled. Having assessed the robustness of the client's processes, First Title then carried out samples on the title records to identify the extent of the registration problem. A timescale for completing registrations after draw-down was proposed and a system of checking volume milestones agreed. The nature of the policy amendments required by the funder was examined to ensure that the final version delivered the necessary cover while allowing First Title to remain within its own reinsurance conditions.
The structure
Policy wording incorporating the funder's requirements was negotiated and issued within the refinancing timescale.