We can source funds for projects up to £250m GDV across residential, PBSA, BTR and Hotels across the entire capital stack to include:
Senior Debt
is used to acquire a property or development site and can provide the costs to carry out the build/refurbishment. The lender takes a legal charge on the property and in most cases a debenture if the property is held in a ringfenced SPV.
Senior lenders usually provide a level of borrowing whereby the borrower has a reasonable level of equity, providing them with a lower risk. Typically, this is at a level of 75-80% of the total cost and the borrower is expected to put in their equity to fund the purchase.
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Development Loans
Development Loans usually provide up to 75% of the land purchase and 100% funding for the refurbishment/build costs. Development lenders use two key metrics, being loan to cost and loan to gross development value. They look to fund up to 85% loan to cost and up to 70% loan to gross development value.
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Mezzanine Funding
Mezzanine funding is occasionally used when the senior loan does not provide the required amount to complete the project, and the developer wants to reduce the amount of equity required of them. These loans are sometimes referred to as junior debt and take a second charge on the property and debenture if owned by an SPV. This type of debt ranks behind senior debt and will have to agree to an intercreditor agreement with the senior lender. Typically, they will lend up to 90% loan to cost and therefore provide valuable capital to reduce the borrower’s contribution.
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Bridging Loans
Bridging loands are usually required as short-term borrowing solution when borrowers are looking for a quick purchase and/or need to obtain planning to either sell on or develop the project.
There is a wide array of lenders in this market and will lend on existing assets such as land, residential or commercial properties, which have an existing market value up to 75% of the property value/cost: whichever is the lowest.
The lender will take a first charge over the property and if held in a SPV will take a debenture also.
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Exit Funding
Exit Funding can be obtained when the exit is taking longer than anticipated and is therefore trapping the developer equity. Normally you can leverage an up to 85% loan to value which enables the release of some developer equity, if available, whilst the remainder of the equity will be realised once the remaining units are sold.
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Investment Loans
Investment loans are for projects that are going to be owner occupier or investors that want to let the property. The loan to value will vary depending on the circumstances but the lender will take a first legal charge and debenture if held in an SPV.
The borrower will service the loan repayments from profits from the business and the lender will undertake thorough due diligence of the business.
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