100% Equity Funding for £16.5m Development Project
Sometimes an opportunity arises while your money is tied up in other projects. However, we can help secure you a loan to boost your available funds. This case study is a prime example of this.
Loan Size: £16,475,000
Location: South East England
Loan Type: Development and equity
Security Type: residential flats
Term: 26 months
About the Deal
The developers came to us as experienced individuals who had completed multiple schemes prior. However, at the time this project was offered to them, it was a step up in terms of size and they were currently already in two other schemes, so their equity was tied up.
However, the proposed scheme was profitable with a return of 30% profit on GDV prior to finance so they didn’t want to miss out. That’s where we stepped in to help them source the necessary finance while their funds were tied up elsewhere.
The approach taken was in two parts. Firstly, to arrange the bottom layer of the capital stack, the senior debt, then to find an investor to provide 100% of the equity.
With this scheme being three times larger in units than other projects, it was important to initially complete a robust presentation to start conversations and negotiations with funds.
We were able to show the strength of the developer, team, and location and, following lender meetings, funding terms were obtained.
With a clear line of sight on the equity requirement and finance cost, an investment pack was created to present to Pure Structured Finance’s investors providing structure and returns.
Senior debt was secured at 65% LTGDV at sub 7% pa. There was some work to do on the structure between developer and equity partner to work with the requirements of the fund, but all was agreed.
An equity structure was agreed with a 50/50 profit share and a 12% priority coupon.
Due to us being able to arrange 100% of the capital stack, it meant the developers could minimise their cash injection, share the risk and it enabled them to develop a project that typically they would have been unable to reach.