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July 9, 2020

£8.7 million development finance for mixed-use project achieved during lockdown

Silhouette construction site development finance project

 


Development projects are often met with an element of uncertainty, but it’s not often a virus pandemic forms a part of the equation. During the Coronavirus lockdown, many traditional lenders stepped back from the market, but as a specialist lender, we continued to power through and help keep projects moving. Owing to our experience, flexibility and confident team of experts we were able to help our client access an £8.7 million development finance facility to continue works on their mixed-use project.


Loan value: £8,700,000


LTV: 61.5%


Development value: £2,070,000 current value with end GDV of £14,165,000


Loan term: 24 months (18-month build and 6-month sales period)


The client

Experienced developer who specialises in mixed-use schemes.


Situation

architects on construction site funded by development finance

The client’s previous project was coming to an end and they wanted to move their build team smoothly on to their next project. The project involved the development of a large site which was purchased pre-planning using short-term borrowing. The planned site would include the development of a Leisure Centre, 19 private residential flats and 13 self-procured affordable flats. The Leisure Centre would form the ground floor and basement of a 4/5 storey building, with the upper floors forming the residential flats. The leisure element of the security includes 2 tennis courts in the rear.

 

The Gross Development Value of the project was £14,165,000 with the 19 private flats being priced between £525,000 for the largest 2 bedroom flat and £375,000 for the smallest 1 bed flat with the average value of £429,211. This equates to between £671 and £570 psf with an average value of £618 psf. The affordable units will be handed over to RP purchaser whereas the leisure will be rented to the open market.

Although well planned, an unexpected pandemic threatened to put the brakes on the whole project – Coronavirus. The application for the development finance was submitted shortly before the COVID-19 lockdown and the funds were urgently needed to redeem the short-term facility that was used to acquire the site.


Our solution

Building surveyor in hi vis checking data on building site

Fortunately, as the building site was vacant, surveyors were able to go and inspect the site whilst still observing social distancing requirements. This meant we were able to progress with the case as usual and successfully delivering the development finance facility required. The initial facility provided £862,000 towards the redemption of their existing facility and a further staged facility to cover the remaining costs to complete the build, including; build costs, professional fees, CIL, S106 and monitoring surveyor’s costs.


Benefit

Despite lockdown, the difficulties in the market and many lenders withdrawing entirely, we were still operating as usual from a remote working environment. With our usual agile approach, our team worked together combining years of expertise and experience to achieve a fast, seamless completion for the client.


Result

With the development finance facility in place, the client was able to redeem their short-term facility and look ahead to completing their project.


“With the current climate we have come out brilliantly on this project, the West one loans team made this happen, thank you guys.” Client

"Given the uncertainty that hit the property market while facilitating this facility it was important for us to work with the developer in a straightforward manner to ensure we provided certainty of finance in challenging times."

Guy Murray, Head of Development Finance at West One Loans.
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