A joint venture is a contractual agreement joining together two or more firms for the purpose of executing a specific business strategy. At LDNfinance, our panel of equity investors have an appetite to engage in joint venture partnerships with experienced developers that can present high-quality projects on time and within budget.
At LDNfinance, we recognise that one of the most important facets of a successful joint venture is finding a suitable match for both the developer and the investor. There are two common joint structures that we can facilitate for our clients:
- 100% Joint Venture Development Funding
The investor funds all of the development costs, including acquisition fees, professional fees and construction costs. Typically, the developer will need to pay for the valuation and legals to purchase.
- Pure Equity Investment Development Finance
The investor funds 10-30% of the total development costs, with the remainder sourced through senior debt at 70-95% of Loan to Costs.
Let LDNfinance guide you through the hardest area of development finance
Due to the number of variables involved and the higher level of risk for all parties, at LDNfinance we work with clients that find obtaining joint venture development finance an uphill task. Our highly-experienced development finance brokers guide our clients through the three key criteria needed to make a development project of interest to prospective joint venture partners:
Experienced developers are preferred by investors. However, if the developer does not have experience, our brokers can facilitate a Quantity Surveyor, Project Manager or Building Contractor as a partner to satisfy the investor’s criteria.
Investors will want to see a certain level of return on the equity they deploy. Projects which have a 30% Gross Return on Costs, 20% Net Return on Costs are acceptable in general. It is essential that the build costs and sales values are reasonable and can be evidenced.
Preferred development locations for investors include London, the Home Counties, Bristol, Bath and Cambridge. However, high-quality applications will be considered across the UK.
Let’s talk about your next exciting development opportunity and arrange a bespoke joint venture finance solution that works on your terms.