I was recently able to arrange development finance for a property developer who had a time-sensitive situation on a development site in London.
My client was looking to purchase and develop a property in east London, a development which would consist of flats and multiple commercial units on the lower ground floor and basement. He hoped to purchase the site for £1.5million, and had calculated that the Gross Development Value (GDV) would be £2.8million upon completion. However, with total costs of approximately £2.5million, this was going to be a tight margin.
He needed to move quickly, or he risked losing the site, so he was looking to arrange a development finance facility quickly. Because of the speed he needed to move at, he was also unable to wait for the planning permission he had in mind in order to make the development a more profitable project.
As an experienced developer, my client was confident he would be able to get planning permission to develop multiple flats and one commercial unit, instead of a balance of both. This would give a GDV of £3.9million, which was a much more profitable endeavour.
However, he did not yet have this planning permission, so it was difficult to secure development finance on this basis. As an additional complication, my client was very asset rich but had the majority of his wealth tied up in other projects.
This was a complex deal resting on a number of factors. It therefore required the knowledge of a broker with a thorough understanding of how development projects, planning permission and development finance deals are likely to progress.
I was able to secure a combination of stretch senior development finance and mezzanine finance, to cover up to 90% of the loan to cost. This was an excellent result, showing how Enness Development can find fast solutions for unusual situations.