100% finance arranged for purchase price and development costs – without JV terms

A developer recently approached us to find them some finance for a conversion scheme – and were looking to borrow 100% of the purchase price as well as 100% of the build cost and professional fee budget.

The developer had borrowed on traditional joint venture terms in the past – whereby in excess of 50% of profits from their schemes (including arrangement fees, interest charges and profit share) had been taken up in charges from their chosen lender.

On this occasion, the developer had negotiated a particularly attractive purchase price for a property in an excellent location – and the scheme also lent itself to phasing.

We introduced a lender who structured a facility to provide 100% of the purchase price and 100% of the build and professional fee costs for phase 1 of the scheme – with sales from phase 1 then envisaged to pay off all of the monies borrowed at that stage, leaving phase 2 completely unencumbered. The developer then intends to put a ‘build cost only’ facility in place with the lender to develop out phase 2.

Lending charges on the above basis are projected to be between 15% and 20% of the forecast scheme profits, instead of the usual 50%+ , a fantastic deal for the developer for a true 100% finance facility.