Update on the funding landscape
I’m sure many of you will have been at Place Party earlier in the month, and it is fair to say that there was a real buzz in the room. Developer sentiment seems to remain positive, both in the city centre and across the region.
There seems to be plenty of appetite for speculative residential development funding, despite the fact that the funding landscape has fundamentally changed over recent years. A myriad of specialist lenders have taken up the mantle – historically filled by the traditional names on the high street.
The choice is now wider than ever. For example, with lenders backed by private funds and peer to peer platforms we have seen the emergence of several new lenders who sit alongside banks, bridging lenders and government supported funding streams. Senior, stretched senior, mezzanine, equity, pre-sale and forward funding or joint venture options are all in play dependent on scheme size, location, profitability and developer cash input or soft equity through planning gain.
Diversity of choice, whilst welcome, presents its own challenges and can be as much a distraction and time consuming as it is rewarding.
The answer to the question, ‘what is either the right funding option or best funding option?’ is not necessarily a simple one!
Equity input and price are obvious factors but as a developer, speed of delivery, certainty of funding and the relationship surely are just as important – it all comes back to a balance.
Preserving liquidity whilst accepting a higher funding cost perhaps enables multiple schemes to be delivered or leaves cash for the opportunistic purchase. A finely priced package which cannot be delivered often results in a lost or frustrated acquisition.
Equally, a well presented and honest proposal, with the right supporting information targeted at the right lending partner, gives a scheme the best chance of success through the credit process.
What is certain though is there is usually a funding solution for most schemes where the property fundamentals and developer credentials stack up.
For assistance or advice regarding securing property funding, contact David Rainford at Cowgills, on 01204 414243 or email David.Rainford@cowgills.co.uk.
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From senior debt to stretched senior, mezzanine and equity providers, there are more lenders in the market than ever before and with appetite to fund schemes in the North...
There are more finance providers in the market than ever before and they are demonstrating a real appetite to lend.