Joint Venture Development Finance

100% development finance, also known as joint venture development finance, allows a developer to fund a scheme without putting in any of their own funds. In order to get to 100% of total costs, we will utilise senior debt, mezzanine finance and equity which may come from one or several lending houses.

Lending is agreed on sites with full planning for residential use. Fox Davidson only work with experienced developers who have a site with a GDV above £5m. We will secure funding from several sources which will cover all costs including land, build and professional fees.

There will be a coupon payable on the debt and share of profits.

• 100% loan-to-value development finance. Land, build costs, and most professional fees are completely funded.
• Loan size from £1 million with no upward limit
• Interest is rolled up and repaid on sale of the development

• Experienced developers only
• Planning permission must be in place
• Multiple-unit schemes with an average unit sale price for the area
• Profit margin needs to come in around 25% to 30% pre-finance against GDV
• Personal guarantees are a requirement (build cost overrun or % of loan)

There are several 100% development finance options:

• Additional security – 100% development funding can be achieved by utilising additional security. The additional security can include existing buy to let properties. Lenders can also utilise existing developments that have not yet sold. This is achieved through the lender placing a charge over the additional security.
• JV equity partner – A JV partner will provide complete funding in return for a share of profits from the sale of the development. Typically the JV funder will require a 40% to 50% share of profits.

It is possible to completely fund a scheme by working with the landowner of a site. You should discuss deferred payments of land or consider JV with the landowner. Fox Davidson finance developments that will be set up in this way leaving minimal cash equity in from the developer.

1. Application and supporting documents are presented to the lender. Lending is agreed in principle.
2. An SPV limited company is set up
3. Valuations are instructed to appraise the development
4. Solicitors are instructed
5. Funds are released

• CVs including previous development projects
• Development appraisal including cash flow
• Full details of the planning decision notice
• Assets and liability statement