- 27th October 2020
- Posted by: DMM
- Category: Joint Venture
If as a developer you have your equity tied up and a great project comes your way then 100% joint venture development funding may be a solution. With the lender providing all, or most, of the acquisition and build costs you will not need your own cash to fund an opportunity. JV finance lenders will offer different funding structures that may include interest charged on drawn down loans with a profit share a little in your favour.
Criteria for JV Development Funding
- Borrowers will need to be experienced developers and demonstrate a successful track record of similar completed projects
- Project terms from 12 – 24 months are typical but up to 36 months may be possible for larger developments
- Facilities from £500,000 to £20,000,000
- Strong profit level – perhaps 27-30%
- Project types will typically be residential, commercial, mixed or conversions
- Full detailed planning permission in place
- Assets will be held in a Special Purpose Vehicle (SPV) or subsidiary company of the lender
“Developers can take up an opportunity without having to put in any, or much, capital. This can enable ore projects to be undertaken”
The Advantages of 100% Joint Venture Development Funding
- Developers can take up an opportunity without having to put in any, or much, capital
- This can enable more projects to be undertaken
- Profit is split evenly or sometimes to the developers advantage
- PG’s are not always required
- All fees, legal administration, monitoring and day-to-day working relationships are all in one place. No need for separate second charge lenders with deeds or priority, etc
- Lenders providing 100% joint venture development funding will often also provide support through the project process
- Loan interest rolled up and will be paid at the end of the term
- Interest rates from around 1% p.m.
JV finance can be a great option for developers when raising cash equity may be impossible. You will have to fund all costs up to the land acquisition, for example obtaining planning consent, valuations, etc, but may be recovered through the loan facility.
Developer Money Market are an independent specialist in property development finance and can help source 100% joint venture development funding.
A strong case will need to be built in order to raise joint venture finance and Developer Money Market can assist in getting terms from the UK’s leading joint venture funders.