Structured bridge exit into development finance with £2m facility for residential site in Surrey
What was the situation?
LDN Finance was approached by an experienced high-end contractor to support the refinance of bridging finance used to secure a site on a private estate in Surrey. Planning permission was in place for two four-bedroom dwellings. This represented the client’s first ground-up project as a developer and the intention was to transition from short-term acquisition funding onto a development facility.
What was the issue?
The site had been purchased under time pressure due to a vendor deadline, with bridging finance used to complete. The first three months of the term were used to amend planning, satisfy pre-commencement conditions and prepare the site for enabling works.
As the development facility progressed through legals, a restriction affecting the land became relevant to the incoming lender’s requirements. This required a lender-compliant solution before funding could proceed. In parallel, the client required funding at around 70% LTGDV, incorporating funds towards redemption of the bridge and 100% of build costs, which reduced the pool of suitable lenders.
What was the process?
Nick McLean, Associate Director – Specialist Finance, structured the funding strategy by sourcing a lender able to support a stretched LTGDV facility aligned to the project’s GDV and cost profile.
Nick positioned the scheme to the lender from a credit perspective, ensuring the development information, cost structure and delivery strategy were presented in a way that supported underwriting confidence. The facility was structured to incorporate day-one land debt alongside the full development funding, allowing the existing bridge to be cleared within the new loan.
When a restriction on the land became a consideration within the lender’s legal process, Nick worked with both legal teams and the lender to establish a workable route forward, ensuring the legal position, lender requirements and project delivery remained aligned.
What was the solution?
A total facility of £2m was arranged at around 70% LTGDV, based on a GDV of £3m. The structure comprised a land loan of £730k and a development facility of circa £1m, covering 100% of build costs.
A lender-acceptable structure incorporating indemnity insurance was put in place to address the restriction. When the associated premium created a barrier to completion, an alternative structure was agreed between the legal teams, lender and LDN Finance, enabling the transaction to proceed on terms acceptable to all parties.
The facility enabled the client to transition from short-term acquisition funding into a fully structured development position and proceed with delivery of the two-unit scheme.
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