We were approached by a first-time developer seeking finance to convert a former mill premises into student pods. Planning Permission had been granted and he had purchased the property with his own funds.
One of his main requirements was to release funds against the current value of the property in order for him to place orders for supplies from China which required up front payments.
The project made sense in terms of profitability and cash flow but this was a first time developer (and his first project was quite large) and in addition he was undertaking the build himself so we couldn’t rely on a Fixed Price Contract from an established builder.
Even with the issues above, we secured funding of £850,000 which gave him 100% of the build costs and allowed for a significant up-front drawdown which allowed him to order his initial stock. Drawdowns were kept to a minimum to reduce costs and the development was completed on time and in budget.
Follow up – with the development completed to a very high standard and students occupying the property we have now obtained long-term funding from a High Street bank to repay the development finance and release equity for his next project.