100% Finance
Many of the facilities that we structure for clients provide a high level of funding
for the scheme or indeed in many cases cover 100% of all acquisition and development
costs.
We find that many clients secure new development opportunities and simply do not
have the available capital to invest at that given time.
There is a wide range of lenders/investors with whom we work who are able to provide
full equity funding for clients with the appropriate level of experience/track record
and for schemes with a demonstrable viability.
Some of these funders provide the complete package of funding needed, while others
invest the equity only of say 30% of costs, which we then marry with an appropriate
debt facility of 70% of costs.
The selection of the most appropriate funder for any given scheme depends on the
strength of the borrower, location, nature and level of profitability of the scheme,
combined with knowledge of the sector preferences that lenders have at that time.
Joint Venture/100% Funding allows clients to secure new development opportunities
where they do not have the available capital to invest due to equity commitments
on ongoing schemes.
Although we have in the past arranged a large number of 100% funding packages, this
type of funding has now become more difficult, but not impossible, to source.
There are opportunities for established and experienced developers to continue to
source 100% funding for schemes of up to £5 million of cost that demonstrate a robust
margin a strong market for the proposed product.
An example of the key terms for 100% funding is outlined below:
Lender: Merchant Bank
Key terms:
- Property acquired in SPV owned jointly by borrower and developer
- Bank provides 100% of all costs
- No interest charged on funds
- Profit divided 60:40 between bank and developer (to reflect no interest charged)
Because there is such a variety in the terms achievable and suitability of any specific
scheme for any one lender, it is imperative to assess each case on its own merits
and advise accordingly as to the most appropriate structure for that transaction.