A long standing friend of the business had requested our assistance with finding a suitable lender to help fund their 100 unit affordable housing scheme in Kent, UK. The developer had owned this particular site for almost 20 years and it had taken almost 5 years to obtain planning for this particular scheme which had huge support from the local council. The borrower needed to fully fund the build and at the same sime refinance an existing bridging loan on the site. The GDV of the scheme is £45 million.
The client had plenty of experience in the residential development industry, with a strong track record. The site had already been cleared and remedial works done so we began working on the loan at a relatively late stage in the process. The client had a preferred valuer and we were tasked with finding a lender who would be happy to use this valuer for their due diligence. His extensive knowledge of the surrounding residential market was an important factor too.
Problems to Solve
The borrower did not want to build the scheme with any pre-sales in place whatsoever. We also had to get the lender comfortable with the borrowers’ desire to build the project himself (ie: without using a JCB Design and build contract) as he was able to do this much more cost effectively than any local contractors. The loan had to be drawn down in two tranches with the first tranche used to refinance the existing bridging loan.
A London based senior debt fund offered the following solution which was positively received by our clients.
65% Loan to GDV
78% Loan to Cost
Margin 7.25% over Base Rate
36 month term
Interest + Fees Rolled up
Fees 1% in / 2% out