Location : Manchester

Loan Type : Stretched Senior Development Finance

Loan Size : £ 13.2m (gross)

Loan-to-Value : 97.4% LTC and 68.9% LTGDV

The Situation

Our client had purchased a site with outline planning from receivership. Part of the monies paid for the land were deferred until the development was built. The client had very little equity to contribute to the project, so we needed a very high LTV loan.

The Challenge

Our client had covered the fees of his professionals, to revise the planning to enhance the value of the site. The build costs, lender interest and fees, and lender professional fees, plus the clients additional professional fees had to be covered entirely by the development loan.

The majority of development lenders want a minimum of 10% of the costs of the overall project injected into a deal by the borrower. On that basis, the client should have put just under £1.5m of cash into the project. In fact, our client had contributed just £ 400k of his own money into the deal.

The Outcome

Through working with our client, visiting the site, as well as meetings with local agents and surveyors, we were able to gain an in-depth understanding of the strengths and weaknesses of both our client and the site.

A very successful marketing strategy was implemented to assist with pre-sales whilst site preparatory works were ongoing. Through forward selling of some of the units, we were able to de-risk the loan sufficiently for a lender to come on-board.

We negotiated close to 100% of the funding requirement on a straight loan deal, rather than through profit share, allowing our client to maximise his return with minimum equity.