Our client was an experienced developer of residential property but was looking to develop their first, pure commercial property. Options were thin on the ground as the lender needed to take a generous view of the portion of ‘sweat equity’ that was in the deal.

Location : Richmond, Surrey

Loan Type : Development Finance

Loan Size : £ 4.56m

Loan to Value : 70% LTGDV and 94% LTC

The Situation

Our client was referred to us by their existing bank, as Development Finance was not something they could offer. They had made a loan against the site, which they were keen to have repaid.

The site had been purchased 2 years prior to our engagement. Our task was to get the new lender to recognise the ‘sweat equity’ element of the deal.

The Challenge

The new lender was being asked to replace a loan that equated to almost the cost of the land when it was purchased. Most lenders prefer not to do this, as it means the client has little to no ‘real equity’ in the deal, thus increasing their perceived risk.

The lack of development experience on pure commercial assets, also counted against our client with most lenders.

The Outcome

We were able to work with a lender, that allowed the current lender to be repaid, to fund 100% of the build process and professional costs, as well as refund some additional monies to the client that had previously spent on the planning process for the site.