63% Loan To Gross Development Value
100% of project costs funded
Interest Rate 1.25% per month, with interest retained
3% Arrangement Fee
No exit fee
12 months term.
An experienced developer client had agreed a deal with a land owner, whereby the land owner would defer half of the land purchase price, until the end of the scheme.
As such, the developer wanted to borrow 50% of the land purchase price, then 100% of the cost of works and professional fees. In essence then, most would consider this as a Joint Venture deal, which commanded a profit share (by the funder), given the developer was not putting any cash in towards the purchase. However, we facilitated a deal with a funder who not only did NOT require a profit share, but did NOT charge any exit fees whatsoever.
Another factor in this deal was that the developer had agreed a pre-sale of the whole development of 20 flats to a Housing Association. The plus side was that the GDV was set, and there would be no profit erosion from the potential time it would take to sell 20 units individually. On the down side, the HA wanted a discount such that meant the profit margin in the scheme was slim.
Our funder took sufficient comfort from the developer being able to demonstrate what price per square foot he could build for, and the ground-works on the site had already been done. Therefore, the costs were as fixed as they could be.
We arranged a 100% funded facility so the developer did not put any cash into the deal. He was naturally delighted.