70% Loan to GDV development funding with mezzanine finance

What was the situation?

An experienced developer had secured planning permission for 26 flats in Bristol and required 70% Loan to Gross Development Value (GDV) funding of approximately £4.9 million to go towards the acquisition costs and construction of the project. Our client required the soft equity created through planning to be counted as developer equity in the deal and we were able to provide support in releasing circa £150k on day one from the facility to rebate costs already incurred to secure planning.

What was the issue?

As the developer had built many relationships with multiple lenders in the past, our main focus was to ensure the pricing from our chosen lenders was the absolute lowest available in the market, with their net loan being the highest in order to best serve his circumstances. Most importantly, it was essential that our team provided an outstanding service throughout the process to ensure that the transaction was as smooth as possible for both our client and the lender.

What was the process?

After taking our client’s case to market and researching multiple finance options and combinations, we used our Debt Cost Comparator tool to analyse all of the facilities most suited to his project’s needs. In the end, this resulted in a solution whereby our client would receive 65% Loan to GDV from a challenger bank and an additional loan from a mezzanine finance provider to reach the required 70% Loan to GDV.

Once we had negotiated the solution with the two lenders in question, we ensured their costs were kept to a minimum with the valuation and legal teams also reducing the costs and relying on pre-existing reports. Furthermore, we ran through the previously incurred costs with the lenders and ensured that, on day one, the developer would receive a rebate for all costs incurred so far.

What was the solution?

Securing the above facilities meant our client only had to put in minimal additional equity to complete. And although all the required flexibility from the lenders was in place, there was the further comfort of a bank that provided a committed facility with a rate of 6.25% p.a. For the senior debt and mezzanine finance at 18% p.a.

Since completion, our client has now built a strong and lasting relationship with the lender and has completed on a further three deals so far. We have no doubt that this partnership will continue to flourish and LDN Finance will always be there to assist both sides to ensure we add outstanding value and service to the process each and every time.

Lending solutions with LDN Finance

Are you looking to secure development finance or mezzanine finance to help you complete on a new or existing project? At LDN Finance, our expert brokers have a wealth of experience in securing specialist finance solutions to suit the individual circumstances of our developer clients, working closely with our trusted network of private banks and specialist lenders to formulate bespoke arrangements at competitive, market-leading rates.

Get in touch with us to organise an initial consultation.