Faced with escalating costs, the Peel Institute made the difficult decision to sell its property to support its services. Chairman Mick May OBE explains how Charity Bank helped the Peel Institute find its feet in an unexpected way.
“The Peel Institute is a charity which has been operating in Clerkenwell for about 120 years. We specialise in working with young people and elderly people, but like all good community organisations, its real role is to act as glue: it binds the community together.
“We’ve always been there and we want to continue to always to be there, delivering programmes that make the lives of disadvantaged people in that area better. We deliver after-school clubs, an outreach programme with kids in danger of getting into trouble; we run the Peel Club, which provides a lunch club for people in the later years of their life, who often suffer great loneliness. It’s not the big stuff, or the high-profile stuff, but it’s absolutely essential.
“We deliver after-school clubs, an outreach programme with kids in danger of getting into trouble… [and] a lunch club for people in the later years of their life…. It’s not the big stuff, or the high-profile stuff, but it’s absolutely essential .”Mick May OBE, Chairman of the Peel Institute
“The Peel Institute found itself in a very precarious position after years of incurring costs that were considerably greater than its revenues. It had one thing going for it, which, if used well, could enable it to navigate itself off the rocks: it owned a building that almost certainly had a value. The trustees took a decision that we wanted to continue doing what we had always done and to do that, we had to sell the building.
“Selling a building is not straightforward, particularly when your building is a community space, surrounded by other valuable buildings, some of which are Grade II listed. To ensure we had time to sell the building at the best value we could get, we knew we might need a mortgage on the building. The purpose of the mortgage was to enable us to survive for a year or two more, giving us the window to sell the building. We decided it would be a good thing, an insurance policy, to have the ability to borrow money and keep ourselves afloat.
“We’ve always been there and we want to continue to always to be there, delivering programmes that make the lives of disadvantaged people in that area better.”Mick May OBE, Chairman of the Peel Institute
“If we didn’t have this insurance, one of two things would have happened. Either we would go bust needlessly, because we found ourselves without the cash to meet our requirements, or we would’ve been forced to make a sale on terms which were not advantageous to us, thereby giving us fewer resources to reinvest.
“That’s where we got to last summer, when we approached Charity Bank. It was in one sense a very easy proposition; but on the other hand, Charity Bank never wants to foreclose on a property. They’d rather we came up with a way of getting ourselves out of it.
“We worked with Charity Bank for about four months until we had the loan offer. It was so easy; Charity Bank spoke peer to peer, professional to professional. Nobody ever made you feel small. I thought it was well-priced; when I queried why some fees were the way they were, it was well explained to me.
“It was so easy; Charity Bank spoke peer to peer, professional to professional.”Mick May OBE, Chairman of the Peel Institute
“We put the property on the market and had two sales which literally failed at exchange of contracts, which is very unusual. When a third buyer came along, our commercial agents were under pressure to agree a deal from us and to lower the price.
“Having the insurance of a standby facility enabled us to achieve a sale greater than an approved lower level, by an amount greater than the value of the loan. It represented 137.5% of the loan – between where we would have been willing to sell the building under duress and where we could afford to drive a harder bargain. The difference covered all of our fees. We then found ourselves in this bizarre position where the sale went through in three or four days and clearly we no longer needed the loan.
“Within the world of finance, Charity Bank did the most ethical thing I think we’ve ever heard of.”Mick May OBE, Chairman of the Peel Institute
“Although we had agreed in our board meeting to approve the loan, there were still some outstanding procedural steps. Within the world of finance, Charity Bank did the most ethical thing I think we’ve ever seen. They said, ‘you haven’t signed the paperwork and therefore you can walk away from the loan’.
“Then we attempted to do the second-most ethical thing we’d ever seen, which was to say ‘well, we’re not happy with that’. We agreed as a board a cancellation fee, which Charity Bank advised us was the first time they’d ever heard of a borrower proposing a cancellation fee. But we did it because Charity Bank had behaved so well and we felt we had to behave in kind.
“Charity Bank acted according to a set of ethics which was quite extraordinary. We are slightly embarrassed. Lesser people might have thought we were stringing you along; we genuinely weren’t. Charity Bank had given us this extra window and we just didn’t need it, but we didn’t know it was going to happen like that.
“Having the comfort of that facility gave us the ability to get a far better price for that building, which ultimately is going to translate into better services for the people of Clerkenwell. That’s the real thing.
“The Peel’s roots are in the community, it was set up by the MP for that community, years ago. We hope it will be operating there in 100 years’ time. The great news is it now has a very exciting future, whereas without Charity Bank’s help, it might not have done.”