Senior Debt

Senior Debt development finance is the conventional type of property development loan, where the lender takes a first charge over the site/ property being developed and can fund typically up to 65% of the Gross Development Value, or 80% of project costs, including an interest provision (so interest does not have to be paid monthly). Senior Debt is the cheapest form of development finance, particularly where the borrower can inject a good amount of cash on day one, towards the land/ property purchase (or refinance).

Whilst a good level of direct development experience can give access to a wider range of lenders, there are lenders who can consider first-time developers. High Street Banks, Challenger Banks, specialist lenders and family offices all provide senior debt. Such loans can vary rather dramatically from lender to lender, and the cost of the loan can be determined by the Loan to Cost or Loan to Value and the experience of the applicant developer, as well as the location, size and type of development.

With such a wide range of development finance lenders in the funding marketplace, each with their own parameters and criteria, utilise our services and spend your own time on the things which you do best! There are no up-front costs, you have nothing to lose.

Financial experts at your service to make finance sourcing a simple process

A strong background in project appraisal, financial analysis and the preparation of submissions to credit committees of banks and other institutions;

A wide network of contacts amongst a wide variety of high street banks, challenger banks, specialist property banks and a range of other lenders, providing us with detailed knowledge of borrowing costs and availability, as well as varying collateral and financial covenant requirements;

The ability to manage the funding process from inception through to the negotiation of detailed facility terms, documentation and drawdown;

An established record in arranging capital from large, complex transactions from multi-phased residential schemes, office to residential conversions, large single unit developments and commercial projects including hotels, student accommodations and care homes.

What is Stretched Senior Debt?

Stretched Senior Debt refers to a first charge development facility which provides an even higher Loan to Cost or Loan to Value percentage, than a typical Senior Debt facility can allow. “Stretched” suggesting the loan goes further than a normal Senior Debt loan would, in terms of leverage. Stretched debt can typically provide up to 75% of the Gross Development Value or 90% of total project costs (whichever is the lower of those two figures). Naturally, such products are only available to well experienced, professional developers, given the developers cash contribution will be a small percentage of overall costs. The enhanced risk associated with higher levels of funding is reflected in a higher interest rate compared to more conventional Senior debt.

A Stretched Senior facility can allow a developers’ equity to go further and is very often used by a developer who has more than one scheme to develop, but a limited amount of capital to deploy.

Using Stretched debt is an alternative to using a “structured” funding package which might consist of Senior Debt and Mezzanine Finance. Often the loan amounts available across the two types are comparable, but with Stretched Senior one lender provides the whole loan, whereas with a mezzanine lenders participation there would be two lenders to deal with, and possibly two lots of professional fees to pay.