Product of the week: 90% development finance on top of senior debt

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THE SCENARIO

Sourcing development finance can be a real challenge, particularly for complicated or more unusual projects. This is particularly frustrating if you are close to securing the level of funding your project requires, but are still experiencing a shortfall. Fortunately, as well as the mainstream lending institutions, we work with many alternative funding providers which means we can assist in almost every area of development finance—including helping you to reach the level of funding your project requires.

For example, we are now working with a private equity investment house who are able to provide funding on top of senior debt for residential, commercial and mixed-used development projects. If you have a development finance project for which you are struggling to secure the level of funding you need, this platform could be the ideal solution.

What can they provide?

This platform can provide up to 90% of the required equity on top of senior debt. For example, for a development deal with a total cost of £10million, a bank might provide 70% (£7million). This platform can then provide 90% of the remaining £3million, leaving you, the developer, with just £300,000 to put in.

This platform ranges from £1.5million to £115million, on projects with a gross development value (GDV) between £6million to £100million.

This lender is happy to consider a range of development projects, including residential, commercial, mixed-used, student accommodation and hotels. With an emphasis on the Greater London area, they will also consider projects in prime commuter towns.

An annual preferred return will be paid on both the investor’s and the developer’s equity, with a hurdle rate ranging from 10-15%. The profit will then be split between the investor and the developer, with the developer benefitting from upside profit share on additional profits made in excess of target profit.

What else can they offer?

In the world of development, good relationships are key to driving the success of your project. This lender endeavours to build long-term relationships with developers, meaning you’ll be able to benefit continually from their strong network of development professionals, including planners, designers, surveyors and project managers.

This platform is also able to back schemes in Europe, Israel, Canada and America.

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