An experienced developer sourced a prime development site and used a Joint Venture (JV) partner to reform the disused Hotel into a Landmark residential development of 21 apartments in South Devon.

Location : Newton Abbot, South Devon

Loan Type : Developer Exit Finance

Loan Size : £999,750

Loan to Value : 75%

The Situation

Our client had approached us a few weeks prior to Practical Completion, having achieved excellent sales to date with 12 of 21 units sold off-plan and with reservation deposits taken on 5 of the remaining 9 units.

The development finance was due to expire in a matter of weeks so part of our brief was to work with the JV Partner to give them peace of mind that they would be replaced. We refinanced from the expensive development finance onto a longer-term and more cost-effective developer exit finance product.

This increased our clients ROCE (Return On Capital Employed) and allowed him to access some of the equity he had created before the sales of the 9 units had been made. Monies which could be used to go towards financing his next development.

The Challenge

There were two challenges to overcome on the case;

  1. The lender we planned to use had recently changed its criteria reducing LTV on developer exit finance from 75% to 65% LTV.
  2. They had also recently changed their criteria reducing the number of units from no limit to 6 units.

The Outcome

By putting together a detailed presentation of the development and showcasing our client’s ability to deliver the scheme, we leveraged our longstanding relationship with the lender. As a result, we negotiated an exception on both the LTV (75%) and the number of units taken as security.

We were able to transact quickly to enable the existing funder to be replaced and secure our client more time to sell the remaining units at full market value.