Deal Spotlight – Gaining time with bridge financing

Bridge financing ensures short-term liquidity for real estate transactions. A real estate company used this financing solution from the ONE Real Estate Debt Fund to acquire an attractive development project.

Time is a decisive factor

In the real estate market, things sometimes need to move quickly. A real estate company faced precisely this challenge when it sought to add an attractive development project in Zurich to its portfolio. To generate liquidity for the acquisition, the company planned to sell three investment properties in a Swiss metropolitan region.

Although several purchase offers had been received for the portfolio, the bids submitted by interested parties did not meet the seller’s price expectations. The real estate company therefore decided to extend the sales phase in order to achieve a higher sale price. At the same time, the acquisition of the development project was time-sensitive. If the transaction could not be completed quickly, there was a risk that the project would be awarded to a competitor.

Bridge financing as the optimal solution

The real estate company found itself in a challenging position. It did not want to sell the portfolio at an unfavourable price due to time pressure, while at the same time it wanted to seize the rare opportunity in Zurich. To achieve this, it required a fast, reliable and flexible financing solution.

The company turned to the financing experts at Property One. They structured a bridge financing solution of CHF 5 million for the real estate company. The financing was secured by subordinated mortgage notes on the portfolio to be sold. Within a very short period of time, the liquidity required to acquire the development project in Zurich was secured, and the purchase was completed as planned.

With a term of three months and an option to extend for a further three months, the bridge financing was structured flexibly and was therefore ideally aligned with the sale of the portfolio. The real estate company’s assessment ultimately proved correct: it was able to sell the investment properties as planned, without time pressure and, most importantly, at the desired price. The bridge financing was repaid using the proceeds from the portfolio sale.