Development Finance
Positive Commercial Finance is the specialist broker for Development Finance. We have many years experience of dealing first-hand with residential and commercial developments from inception to completion, helping property builders and developers get their projects funded.
We have access to a wealth of reputable development funders throughout the country, including private banks, High Net Worth individuals and private investors. More recently, our private sources of funding have grown rapidly, giving us even more options for development funding and therefore increased competition in the funding marketplace.
Interest rates vary dependent on the size of the scheme, the geographical location and the amount of cash/ equity the developer has to contribute. A “normal” development funding package would consist of 50% of land costs and 100% of build costs (subject to a maximum percentage of GDV), but the recent increase in competition from funders has seen this increase to 75% of land costs and 100% of build costs (subject to a maximum percentage of GDV).
Many developers now need a structured finance package consisting of senior and mezzanine debt to help them get a development underway. Whilst there are a number of funders offering the senior debt, it is the “top slice” of funding which is crucial to completing the package in some cases. Our private funders can fulfill this role by providing the funds to cover any shortfall which may arise. With the addition of mezzanine finance we can often reduce the clients cash input requirement down to 10% of total costs, or sometimes even less with the right mezzanine provider.
In some cases, 100% funding packages can be achieved (often with additional security) for the right project in the right location.
The minimum loan amount for development finance is generally around £50k, and whilst there is no maximum, fewer options become available above a facility requirement of £5m. The average facility size in 2011 on deals we completed was c£750k. The “sweet spot” for most lenders currently is from £500 to £3m.
We have helped fund many new build schemes including both apartments and houses, in addition to the numerous renovation and refurbishment projects. As always, a developer must be able to show sufficient experience to access the best rates.
We would be happy to consider any viable funding opportunity. The initial presentation to a potential funder is vital – it is therefore very important that the project is presented in the correct way and that the numbers are realistic and achievable. We are very well versed in the language of the development funder and can best package an application. Our belief is that our panel of development funders is second to none – if we can’t find a home for a case, there isn’t one!
Our sources cover the whole of the UK (including Scotland!), and can consider cases which other brokers and funders might not. Sometimes a different approach is required if the project is totally viable but in the first instance but does not seem to “fit” a funders model - our experience and knowledge can be vital in finding a solution.
