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Senior Stretch Debt funding above 90% LTC

Article by Colin Anderson Executive Director

What was the situation?

Key figures:

  • £3.2 million Gross development value (GDV) Site
  • 93% LTC / 76% GDV funding
  • No Profit Share Arrangement
  • Annual Coupon Only

An experienced developer-contractor who had undertaken a number of similar schemes previously. The client’s funds were tied up in other developments and therefore required a funder who would provide maximum leverage.

What was the opportunity?

Development site in South London with planning for nine apartments and one house.

What was difficult about this case?

The client did not wish to proceed with a funder that requires a profit sharing arrangement and we needed to work within a tight time deadline.

What was the process?

Having arranged the funding for the client’s previous developments, I had already put together a development funding data room for the client incorporating photos and financials of his previous developments, cashflow models, appraisals, etc. I approached a funder which I knew from prior dealings, that could take a holistic view on the client’s circumstances and the project itself.

What was the solution?

The funder was suitably impressed by the client’s catalogue of works and their ability to work to timescale and budget. This encouraged them to offer a senior debt product at 93% loan to cost on a fixed annual coupon without the requirement for a profit share split at the back end.

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