London Belgravia Group brings Deposit Release Bonds back to market

London Belgravia Group has brought its Deposit Release Bonds (DRB) back to the market, to provide developers with a low-interest source of working capital for their project.

In an ever-hardening insurance market, property developers with off-plan sales strategies have been facing challenges in securing deposit release cover alongside their latent defect policies.

Recognising this, London Belgravia has sourced new, exclusive capacity to bridge the gap with the return of its DRBs.

The bond enables a developer to use the funds in escrow for the project’s remaining construction costs, as opposed to obtaining additional capital from traditional funding lines – which will result in a substantial saving for the developer.

These bonds go up to £15m, effectively supporting schemes of up to £150m GDV (with an assumed 10% deposit per unit).

Depending on how a project is already leveraged, the total 6-12% fixed cost of the DRB may prove more suitable that junior debt or private equity.

“We’re pleased to reintroduce this offering to property developers, many of whom are seeking to unlock working capital to complete their sites,” commented Giles Fallan, CEO at the London Belgravia Group.

He added: “From a finance broker perspective, if you pick up a scheme that is looking for additional funding partway through the politics and complexity of arranging mezz on another broker's senior debt, it is often fraught with challenges.

“The DRB allows you to navigate that minefield and release funds ‘in’ the project.”

Leave a comment