Development Finance

Development Finance otherwise known as Joint Venture (JV) development finance is where a lender provides 100% funding to cover the purchase of the site and build costs of the entire project. In return for the upfront finance, the profits from the sale of the property are usually shared 50/50, but some lenders may also charge interest on the funds drawn.

Ideally, we like to work with experienced developers who have a solid track record with developments that fulfil the following criteria: 

  • Multi-unit residential new build under PDR in the mid-price bracket 
  • Projects length should be no more than 24 months (but can be 36 months depending on returns 
  • Full planning permission must be in place 
  • Gross Development Value (GDV) target of the entire development in excess of 5m 
  • GDV per unit should not be greater than £500K 

Returns are based on Return on Capital Employed and the profit is divided between joint venture partners, typically in the developers favour.

Mezzanine Finance

Mezzanine finance fills the funding gap between a developer’s equity and the senior bank debt. This type of finance has expanded in recent years and there are more than 50 specialist providers in the UK. You may choose to use mezzanine financing even though you have the funds available as it reduces your equity requirement, spreads your risk and increases your percentage return on investment.

Key Points

  • Up to 90% Loan-to-Value
  • Debt margins 6-12% depending on leverage and credit 
  • Available for offices, retail, student and residential investments

We can arrange finance on all UK developments with lenders that are Mezzanine finance market leaders to ensure the best loan terms are available.