Development Finance, Borrowing 100% of Build Cost For £8.5m Development in South West London

By James Mcgregor on Mar 29, 2021

This project is a great example of how we worked with lender and developer to create a great outcome for all parties.

We were initially approached by a developer to source them funds for a project in South West London. They wanted to borrow as much money as possible on day 1 of the loan, the main reason behind this was to give them liquidity to be able to move at pace on other sites that come available. The problem with a lot of lenders in this scenario is they do not like to take the full planning gain into account, due to our knowledge in this area we were able to maximise the day 1 money for our client.

This allowed us to move forward with the following terms:

Total Loan Facility - £5,400,000
Day 1 Money Released - £1,100,000

Loan Breakdown – The remaining funds was used to cover 100% of build cost and all fees.
Exit – Sale

The outcome for our client has released them £1,100,000 against the site valuation which will allow them to capitalise on other projects. The amount of money released day 1 was £500,0000 more than our client currently had been offered. They have also been able to build out the project knowing they have full support of the lender which will maximise their overall position as a business. As with everything the devil is in the detail and it is important to really understand the bigger picture when taking on development finance. There is a lot of hidden caveats that can really catch developers out with hidden fees and cash flow covenants. Please do take the correct advice when borrowing on your next project.

 

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