100% Development Finance Without Joint Venture Terms

Deal Structure

• 100% of the purchase price funded
• 100% of Phase 1 build costs funded
• 100% of professional fees funded
• No traditional Joint Venture (JV) profit-share structure
• Phase 1 designed to repay the facility through property sales
• Phase 2 planned to use a build-cost-only development facility

Deal Summary

A property developer approached us to arrange finance for a conversion project. The developer wanted to borrow 100% of the purchase price, as well as the full build cost and professional fee budget.

The developer had previously used traditional Joint Venture development finance. However, those arrangements had proved expensive.

In previous projects, more than 50% of the scheme’s profits had effectively been absorbed by lender charges. These included arrangement fees, interest and profit-sharing costs.

This time, the developer wanted a more efficient funding structure.

The developer had negotiated a particularly attractive purchase price for a property in an excellent location. The site also offered the opportunity to develop the project in phases.

We identified a lender willing to take a different approach.

The lender structured a facility that provided 100% of the purchase price, together with 100% of the build costs and professional fees for Phase 1.

The development was structured so that sales from Phase 1 would repay all outstanding borrowing from that phase. This would leave Phase 2 completely unencumbered.

The developer then plans to arrange a separate build-cost-only development finance facility with the lender to complete Phase 2.

This structure provided the developer with the high level of funding required without relying on a traditional JV arrangement.

Most importantly, the projected lending costs represent approximately 15% to 20% of the forecast scheme profits. This compares favourably with the 50% or more that the developer had previously experienced under traditional JV terms.

The Outcome

We arranged a true 100% development finance facility covering the purchase price, build costs and professional fees for Phase 1.

The structure also allows the developer to retain a significantly greater share of the anticipated project profits than under their previous JV arrangements.

By using a phased development strategy and matching the funding structure to the project’s cash flow, the developer can maximise the efficiency of the finance while retaining greater control over the scheme.

This case demonstrates that 100% development finance does not always require a traditional Joint Venture structure or a 50%+ share of project profits. With the right lender and a well-structured proposal, developers may be able to secure high-leverage funding on more attractive commercial terms.

If you are looking for 100% development finance without JV terms, Positive Commercial Finance can explore specialist lenders and funding structures that could help you retain more of your development profits.