Joint Venture/Equity Development Finance

£100,000 – £2.5 million – 6 to 24 months.

Joint Venture/Equity funding provides experienced developers with up to 100% loan to cost.

Equity/Joint Venture Partners typically invest in the development project, through shares in a specially created SPV or through a joint venture profit share agreement. Investment partners require the house builder to provide guarantees on cost overruns in order to protect their return.

Applications

Focus Commercial joint venture lender will consider putting up to 90% of the development costs including property acquisition/valuation, fees, build/refurbishment costs & interest for residential development or refurbishment, and work in joint venture with a development partner.

How does this work?
• An appraisal is agreed with a fixed profit share to joint venture lender
• The property is bought/transferred into a special purpose vehicle company, that is 100% owned by joint venture lender
• Joint venture lender and the joint venture partner enter into a development agreement which protects the rights of each party
• Joint venture partner has a facility over an agreed period to develop the property and sell or refinance the property
• Interest of between 8-10% per annum is applied to the facility

Benefits

  • This is an ideal product for existing developers and new developers who lack the cash/equity to put into new development/property refurbishment projects. It is normally required to have to put in 30%
  • This product only needs 10% input thus making opportunities achievable
  • Ideal for property developers who can spot potential sites with GDV/profit gain
  • Ideal for those wishing to get on the property developer ladder
  • Enables profits for gain for more developments in the future

Case Study

Clients are experienced residential development architects and project managers for respected national development companies who wanted to start their own projects identifying suitable residential development sites for good profit on the GDV realisation.

• Only had £100,000 to put in to the deal
• Site purchase price was £435,000
• Build Cost was £1.5 million
• GDV £2.55 million

Therefore the client needed £300,000 cash to put in to the deal for development finance to purchase and develop the site. With this exclusive product for new and existing Focus Commercial clients, the client only had to put in £100,000 to the joint venture lender proposal in which they set up an SPV limited company, and took on 90% of the costs for the purchase and whole development. This enabled the developer to finish the site and gain profits from the project with some shared with the joint venture lender.

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