Case Spotlight | What We’re Working On This Week
The Situation
An experienced European real estate entrepreneur is acquiring a high-value residential property in France, for €40 million.
The client would prefer to finance the full purchase price rather than deploy €40 million of capital into the acquisition.
At first glance, that creates an unusual lending requirement: a €40 million facility against a €40 million purchase.
However, the transaction is not being considered as a conventional 100% property LTV mortgage.
Working alongside the client’s existing Family Office and professional advisers, we are exploring a structure that combines property-backed lending with pledged liquid assets.
This creates an important distinction.
The client may be seeking 100% of the purchase price, but that does not necessarily mean the lender needs to take 100% exposure against the property alone.
The question we are exploring is:
Can the client’s wider asset position support the full €40 million acquisition while maintaining a security structure acceptable to the bank?
The Transaction
The property is a high-value residential asset in France and is intended to be acquired through a newly incorporated SPV, wholly owned and controlled by the client.
The proposed strategy is to hold the property as a medium-term investment for approximately five years, with the potential for a future sale depending on market conditions and valuation.
It is not intended to become the client’s principal residence and there may also be an opportunity to generate rental income during the holding period, with approximately €5 million per annum indicated.
The purchase price is €40 million.
Historic valuation evidence provides additional context to the acquisition. A January 2022 valuation placed the property at €78 million, while a June 2026 BNP valuation indicated €101.4 million.
The reported rationale for the current purchase price is the seller’s preference for a relatively quick completion following the death of the former owner.
These figures are relevant context rather than a substitute for the lender’s own valuation and due diligence. Any lending structure would ultimately remain subject to the bank being comfortable with the property’s current value and marketability.
The Structuring Question
How can a client finance the full €40 million purchase price when the lender does not wish to advance €40 million against the property alone?
This is where the client’s wider balance sheet becomes relevant.
Rather than approaching the transaction solely as a property mortgage, the indicative structure brings together two forms of security:
the property itself; and
a pledged portfolio of liquid investments.
This allows the bank to consider the transaction across the client’s broader asset position.
What We’re Exploring
The indicative structure under consideration is:
€22 million supported against the property, representing approximately 55% of the €40 million purchase price;
plus
€18 million of Lending Value supported by pledged liquid assets.
Together, these could support the €40 million facility required for the acquisition.
The client could therefore potentially finance the entire purchase price without the lender relying upon 100% leverage against the property.
That distinction is central to the case.
Marketing Value Versus Lending Value
The investment portfolio introduces another important consideration.
€18 million of Lending Value does not necessarily mean €18 million of assets under management.
Banks typically attribute different lending values to different investments according to factors such as liquidity, diversification, volatility, concentration and asset type.
For a highly diversified and liquid equity portfolio, indicative LTVs could potentially range from approximately 75% to 90%, although the actual lending value would depend on the individual holdings and the bank’s criteria.
Based on the structure currently being discussed, achieving €18 million of Lending Value could require an investment portfolio with a Market Value of approximately €23.5 million to €25 million.
The required portfolio could be higher where individual positions receive a lower lending value or are not eligible as collateral.
This is why understanding the composition of the client’s existing investments is important.
It is not simply a question of how much the portfolio is worth.
It is how much of that value the bank is prepared to recognise for lending purposes.
Why Consider This Structure?
The client could, of course, contribute significantly more cash towards the purchase.
But that needs to be considered alongside their wider investment and liquidity strategy.
For clients with substantial liquid assets, deploying additional cash into a single property may not always be the preferred approach.
A combined property and portfolio-backed structure can potentially allow a client to maintain greater exposure to their existing investments while accessing the capital required for the acquisition.
The decision is therefore wider than the mortgage itself.
It involves considering how borrowing interacts with liquidity, investments and the client’s medium-term strategy.
Importantly, those decisions sit alongside the work of the client’s existing investment, tax, legal and wealth advisers.
Our role as the debt adviser is to understand that wider strategy and structure the borrowing so that it can complement it.
Working Alongside The Family Office
A key part of this case is ensuring the proposed lending structure works alongside the client’s existing advisory arrangements.
The bank can work directly with the Family Office, which remains central to the client’s investment strategy.
Subject to the appropriate Right to Information and Power of Attorney being agreed, the Family Office can continue to oversee investment decisions while the relevant assets are held within the bank’s custody and security arrangements.
This creates the potential to introduce the lending bank without unnecessarily displacing the client’s established advisory relationships.
Two indicative investment and custody routes are currently being considered.
Under an advisory arrangement, a dedicated Investment Adviser could execute trades on instruction while providing access to the bank’s investment research. Indicative combined trading and custody costs are approximately 45 basis points.
Alternatively, a direct-access arrangement could provide execution access to the bank’s traders, including across European and US markets, alongside access to internal investment research and data.
Indicative pricing could potentially be negotiated towards 25 basis points per trade plus 25 basis points for custody, subject to confirmation.
These arrangements and fees remain indicative and would need to be agreed directly with the bank.
Why Isn’t This Simply A 100% LTV Mortgage?
Why isn’t this simply a 100% LTV mortgage?
Because the lender would not be relying solely on the property for its security.
There are two ways of looking at the transaction.
From a purchase funding perspective:
€40 million purchase price
€40 million facility
100% of the acquisition funded
But from a security perspective:
€22 million supported against the property
plus
€18 million of Lending Value from pledged investments.
That distinction can be particularly important for clients whose wealth extends beyond the property they are acquiring.
Rather than looking at one asset in isolation, a private bank may be able to consider property, investments and liquidity together when structuring the facility.
Where Does The Debt Adviser Fit?
For us, this is where the transaction becomes particularly interesting.
The client already has a Family Office and established professional advisers.
The objective is not to replace those relationships.
It is to bring specialist debt expertise into the existing advisory framework.
Our role is to work alongside those advisers to understand the client’s objectives and determine how the lending market can support them.
In a transaction such as this, that means bringing together several interconnected considerations:
- the client’s €40 million funding requirement;
- the appropriate level of property leverage;
- the composition and Lending Value of the investment portfolio;
- the AUM and custody requirements of the bank;
- the Family Office’s continued role in investment decisions;
- the ownership and SPV structure;
- and the client’s intended five-year investment horizon.
Each adviser brings expertise in their respective discipline.
Our role is to focus specifically on the debt: understanding lender appetite, testing possible structures and helping coordinate the lending proposition with the client’s wider professional team.
That collaborative approach is particularly important where borrowing interacts with investment portfolios, corporate structures and significant international assets.
The Takeaway
A client seeking €40 million to acquire a €40 million property does not necessarily require a conventional 100% LTV mortgage.
Where sufficient liquid assets are available, the financing can potentially be structured across the client’s wider balance sheet.
In this case, the structure being explored combines approximately €22 million of property-backed lending with €18 million of Lending Value from pledged liquid assets.
That could potentially allow the client to finance the full acquisition while maintaining a significant proportion of their capital within an investment portfolio.
But achieving that outcome requires the different components to work together.
The property valuation matters.
The composition of the investment portfolio matters.
The bank’s Lending Value methodology matters.
The custody arrangements matter.
And, importantly, the structure needs to sit comfortably alongside the strategy already established by the client’s Family Office and professional advisers.
For us, that is the value of collaborative debt advice.
Not replacing the expertise already around the client, but adding specialist lending knowledge to it.
When advisers work together, complex borrowing can be considered as part of the client’s wider financial strategy rather than as an isolated transaction.
This Case Spotlight is illustrative. Details may have been anonymised, simplified or altered where necessary and should not be taken as describing the complete circumstances of any individual client or transaction.
This content is for general information only and does not constitute personal financial, investment, legal or tax advice. Valuations, lending values, pricing, fees, leverage and security requirements are indicative only and remain subject to lender assessment, independent valuation, asset composition, due diligence, credit approval and market conditions.
The value of investments can fall as well as rise. Where investment assets are pledged as security, changes in their value may affect the collateral position and could require additional assets or other action under the terms of the facility.
Property-backed borrowing is secured against property. Failure to meet the terms of the facility may result in enforcement against the assets provided as security.
