Property developers facing the challenge of increased expenses in senior debt development finance can explore alternative and attractive funding options. To offset the impact of higher interest rates, it’s crucial to consider facilities that offer favourable terms and financial viability.
For instance, securing a fully funded development loan from a non-bank investment fund could be a viable solution. In one recent case, a property developer successfully obtained a £10.0m peak debt facility at 65.0% LTGDV to finance executive family homes in Kent. The facility, with an achievable interest rate of 7.0% per annum, was made even more appealing due to the strong EPC rating of the properties.
Similarly, another property developer obtained an £8.5m fully funded facility at 65.0% LTGDV to finance a 40-unit flatted scheme in Dorset. The non-bank investment fund not only offered an interest rate of 10.0% per annum but also forward-funded the development. This means that the developer didn’t need to provide cash flow upfront before project monitor reporting, easing the financial burden in the short term.