First-time developer, joint venture funding - LDN Finance

First-time developer, joint venture funding

Article by Nick McLean Associate Director - Specialist

What was the situation?

The clients were seeking to purchase a site with planning permission for nine dwellings in Canterbury and required both senior debt and equity funding.

What was the issue?

Although the clients had strong project management experience, it was their first multi-unit scheme as a developer. As such, the key challenge was sourcing an equity partner that would take a sympathetic view with regard to their experience and then partner them with a senior debt provider with a similar approach.

What was the process?

With all our new developer clients we will arrange an initial meeting. This is a key part of the process as it enables us to understand the project and the client’s capabilities in greater detail. From this meeting we are seeking confidence in the quality of the scheme and the ability of the developer to deliver their project.

Following on from the initial meeting, we then proceed to collating as much information about the scheme and developer as possible so that we are able create a detailed presentation to potential funders.

What was the solution?

We sourced senior development finance to 65% of the gross development value (GDV) from a specialist lender along with a mezzanine loan facility from a family office. With this arrangement, the client was only required to inject less than 1.00% of the total development costs.

The clients have since commenced their development and it is progressing well. We are already discussing their next project and the funding requirements.

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