Stretched Senior Debt

Typically, these are well-established Development Finance lenders, who will naturally have to be totally confident in the developers’ ability to “deliver” the project. Provided the developer has a strong enough track record, lenders are more willing and able to offer a higher Loan to Cost or Loan to Value.

Given the enhanced loan amounts which a Stretched provider can offer, their risk is much greater, and therefore they need to be sure that the build programme is adhered to. Naturally, an experienced person is much more likely to be able to efficiently deal with any “unforseens”, and as such, these lenders will not back inexperienced developers or property professionals.

In our opinion, such facilities can provide a very fair cost of finance, given the funders exposure. Arrangement fees and exit fees are often the same as a standard Senior Debt facility, so the difference is an increased interest rate, and typically that will be 2 or 3% above a Senior Debt rate.

No, they won’t. Only Joint Venture deals require a profit share, and Stretched Senior deals are on a Debt basis.

Stretched Debt is provided by one lender, whereas Mezzanine finance will include a senior debt lender and a mezzanine lender, therefore two different lenders to satisfy, which both have their own costs which you will be expected to cover.

That really depends on the extent of the poor credit, and the explanation as to how it arose. If there is a story which a lender can sympathise with, fully understand and not be concerned by any resultant liabilities, then it is possible.

The developer’s cash will go in, in its entirety, towards the land purchase. The lenders facility will then cover the balance of the purchase price, and then the costs to complete the scheme.

Yes, absolutely. Get in touch now and let’s talk. As a well-established development finance broker, we have strong relationships with the lenders who can offer such facilities, and they take a certain level of comfort from knowing that we are involved in presenting and packaging loan applications.

Heads of Terms can be issued quite quickly, provided we have a fully detailed proposal including a development appraisal & cash-flow, detailed build costs, a copy of planning permission, drawings and plans and details of the applicants’ experience. Once the Heads of Terms have been accepted, we can get a credit backed offer in 48 hours.

A third-party contractor is often preferred. They will need to able to demonstrate sufficient experience with the company being in good financial standing. Larger Schemes will usually require a 3rdparty contractor with a JCT in place.

Some lenders do allow the developer to manage the scheme and employ the sub-contractors and direct labour themselves.

At Positive Commercial Finance we do have relationships with all the High Street banks. A Stretched Senior product is not usually offer by the high street banks. This type of product is more likely offered by finance houses, challenger banks, investment banks, managed property funds, specialist lenders, private family offices and institution and private investors.

Limited Companies, Sole Traders, LLPs, Partnerships and Offshore companies.

The most common structure is to use a Special Purpose Vehicle.

Yes. We have options in Southern Ireland for Stretched Senior Development Finance.