Case snapshot
- Facility
- Development finance
- GDV
- £15,500,000
- Loan amount
- £7,500,000 net
- Margin
- 3.5% over SONIA
- Location
- Surrey
- Outcome
- £400,000 saved over the 2-year term
Development Finance
For developers, the ability to source the correct funding structure can be the difference between success and failure. Rate and cost are certainly important factors. However, a ‘cheap’ lender that provides zero flexibility can be quite a costly option further down the line when issues arise on development projects. Planning and construction absolutely come with so many risks attached so partnering with the right finance provider is a key factor.
Structured Finance Advice for Developers
The P10 Financial team is experienced in helping property developers find the right funding solutions for property developments,
In this particular situation, we were competing to source development terms for our client who had already been discussing the project with a lender directly. Our main objective was to deliver better-priced terms that allow the client to progress on their deal as planned at the correct time.
There are always issues to overcome on funding development sites. Still, the main thing that was making the deal slightly more complex than it should have been was due to the fact the capital values on this development were extremely high when compared to the rest of the area. This creates issues with not just credit policy but also valuations.
The main issue for the P10 Financial specialist team was to find a lender that could lend the net money required at the cheapest margin possible while delivering on the correct structure for the duration of the term.
Delivery for Our Clients
The solution we delivered was as follows:
GDV - £15,500,000
Net Development Loan - £7,500,000
Margin – 3.5% over SONIA
Lender arrangement fee – 1%
Lender exit fee – 0.5%
Exit – Sale
This solution delivered on all objectives for our client:
Saved our developer £400,000 in interest & fees over the 2-year term
Allows the client flexibility to refinance to a term mortgage at 1.95% over SONIA once the work has been finished
Delivered a 70% return on capital
Lending for Property Developers
Property development is never easy—if it was, everyone would be doing it. But with the right professional team in place, a bit of foresight, and you can build a desirable product the stars can align. Just make sure your finance team is as sharp as your architect.
Do you need advice on how best to fund development projects? Are you looking for land opportunities for future development sites? Our specialists have years of experience and a growing network of landowners and specialist lenders. Get in touch to find out about future opportunities and to discuss your funding requirements. We would love to work with you.
