70% LTGDV Development Finance

Deal Structure

£4.23m facility (gross, including interest & Arrangement Fee)

70% LTGDV & 84% Loan to Cost

2% Arrangement Fee

Interest Rate 8.75% per annum

1% Exit Fee (based on the facility amount)

24 months term

Deal Summary

We were tasked to facilitate a Development Finance facility to enable a new client to buy a site in the North West which had planning consent for 27 houses including a mixture of detached, semi-detached and townhouses.

A fairly high leveraged facility was required, with a preference to avoid utilising third party mezzanine finance as the developer wanted only to have to deal with 1 lender, given a previous experience with a mezzanine funder involved “over-bearing” monitoring and duplication of professional fees.

Our new client was sufficiently experienced and had a strong enough profile to be able to access such funders, and as such we procured 2 quotes which were rather similar, at 70% LTGDV. The chosen lender won the business thanks to their pro-active approach and having the capacity to visit the site & meet the client within 48 hours of the terms being accepted, in principle. The facility then completed within 6 weeks of the site visit.

We facilitated a loan which provided 70% of the Gross Development Value figure (including interest & fees), which provided 84% of the total project costs. The interest rate reflected the leverage, and was agreed at 8.75% per annum, to be charged against the drawn sum. Given the number of units, a term length of 24 months was negotiated, to allow sufficient time for the sales process.