Joint venture funding – the most conventional form of development finance loan
A joint venture could be considered if a developer lacks the financial means to get a standard development finance loan. JV finance involves 100% funding from investors or partners for a profit share. Connect with us and find joint venture funding options. The unique nature of JV funding is that it is a venture in which the developer and the investor(s) agree on a case by case basis. At Finspace, we are experienced and have already facilitated several joint venture deals for our developers.
Here are the key features of joint venture funding:
- 100% cost covered
- Project needs to show minimum revenue of 25% on GDV
- Fees, charges, and interest depend upon a case basis
- Net revenue shared between JV investors and developers
Senior Development Loans
These loans can be used on residential or mixed-use schemes and are lower down the risk curve from a lenders perspective, therefore attracting the most competitive pricing. They are generally limited to a gross LTGDV of 60% and a gross LTC of 80%.
As the name suggests, stretched senior loans are senior loans that have had the leverage parameters stretched. These loans can also be used for residential and mixed use schemes but the loan gearing can be increased to 75% LTGDV or 95% LTC. Due to the increased leverage and risk these loan attract a higher interest rate than normal senior loans.
Mezzanine Finance is an expensive type of finance that is used to top up normal Senior Debt loans where the client requires extra leverage. Although the pricing is more expensive, the mezzanine element of a loan is generally a lot smaller than the senior loan so the blended rate across both facilities evens out to a competitive level. Combined Senior & Mezzanine debt can increase leverage up to 75% LTGDV or 95% LTC, net.