Refinance of a Development Facility on a “nearly finished” scheme

Deal Structure

70% Loan To Value (net) on Day 1, then 100% of Costs to Complete funded in arrears.

£1.85m loan

2% Arrangement Fee

Interest Rate @ 0.7% pcm

No Exit Fee

No Additional Broker Fee

12 months term

Deal Summary

Our client was coming to the end of the build programme on a development of 9 houses in Lancashire which he had recently started to actively market for sale. The developer had encountered delays on site predominantly due to the utility providers not adhering to their pre-arranged timetable. There had also been some cost over-runs which the developer had managed to fund himself.

The Development Finance lender had been supportive but was unable to offer any further extension without the developer incurring another Arrangement Fee, so we took the decision to refinance to a “Developer Exit” bridging product to ultimately give the developer more time to sell the properties, once works were completed.

The preferred lender took a commercial decision and was happy to work off the Gross Development Value figure despite some of the properties not quite being 100% finished, and without some of the Practical Completion documents & New Home Warranty certificates in hand. This meant the incoming loan would fully redeem the current Development Finance debt, in addition to providing a further draw-down to reimburse the cost of works, in arrears.

4 sales have been agreed and the scheme should be fully completed in a month. The lender also agreed to release some equity from sales receipts once their LTV reduced below 60%, which will be utilised on the developers land purchase which has been agreed in principle.

Contact John Waddicker

07974 703375

[email protected]