38 FINANCE & INSURANCE
WITH INCREASED COMPETITION, THE INDUSTRY IS BEGINNING TO SEE MORE COMPETITIVE DEVELOPMENT FUNDING PACKAGES EMERGE
existing current regional interests in predominantly bespoke student facilities. This outlook, together with the returns when compared with other less “secure” investment opportunities in the UK, has seen an increase in the number of new property funders entering the housebuilding arena. With the increased competition, the industry is beginning to see, rather unsurprisingly, more competitive development funding packages emerge, with lenders considering 85-90 per cent LTC and 65-70 per cent LTGDV on a fully funded basis for an attractive scheme.
The increased leverage naturally attracts slight premium pricing and each individual developer will have their own
view, but with the re-emergence of pricing for risk, the developer at least has choice. In instances where the developer has acquired the land and “worked–up” planning to deliver planning gain and value enhancement, the challenger banks will acknowledge the efforts of the management team and ascribe added value when assessing the development appraisal. This can result in a funding offer that is
equivalent to the total development costs (construction, professional fees, finance and marketing) without the requirement for further equity injection, assuming the land is held unencumbered, allowing developers to be able to achieve 100 per cent development funding.
Andy Keal is senior relationship manager at Midlands Asset Finance
WWW.HBDONLINE.CO.UK
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