Residential development

Broker arranges £4.8m funding for residential development



Broker Oakmead Finance has helped a developer to source a £4.79m facility required for the construction of a 151-unit residential development to the east of Doncaster.


The firm had been approached by a broker who was unable to source funds for a highly experienced developer who had lived and worked abroad for the past decade.

The developer had obtained full planning permission and purchased a site through a bridging loan, but had been unable to source the finance needed to commence the build.

Many lenders were unwilling to provide a facility as the build – which was to be split over three stages – required a large development finance facility and a high loan to cost.

The developer needed funding to re-bridge the existing loan as it neared its redemption date or face selling the site.

In order to entice more lenders, Oakmead decided to reposition the refinance, build, individuals and development potential into one package.

Due to a lack of tangible security in the UK, the lending proposal focused on the developer’s personal investment in the project, the amount of off-plan pre-sales and a demonstration of how the loan to cost would reduce over the stages of the build.

As a result, specialist lender Castle Trust offered a revolving £4.79m facility with a 70% loan to GDV and 100% of development costs to construct the first phase of 43 residential units.

“We are very excited to be working hand in hand with an experienced and capable developer with an enviable reputation for building stylish, high-quality homes, which are affordable to local home buyers,” explained Nick Oakley, the director of structured finance at Castle Trust.

The facility included an interest roll up and a phased loan to cost permitted starting at 87%, with the understanding that this would reduce as the build progressed.

The borrower was able to refinance the bridging loan on to a cheaper rate and complete the first stage of the development.

Money owed will be re-paid through pre-sales and sales completions, which will be released back to the developers to complete the remaining stages.

The build will take a further 12 months to complete.

Peter Selvey-Clinton, head of development finance at Oakmead Finance, added: “This was an innovative solution to the funding dilemma and fell outside their [Castle Trust’s] normal lending parameters.

“But it was a credit to them as a funder that they took a qualitative approach and looked for a way to support rather looking for a reason to say no.”

For further information on this case or to enquire about financing your own development, contact Oakmead Finance on 0208 935 5127 or visit www.oakmeadfinance.com.



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