development finance
Joint Venture Development
Finance.
Joint Venture Development Finance is a type of financing solution that gives you up to 100% funding to finance a new property development project.
If you’re an experienced property developer and you need access to capital to cover cost for a potential development opportunity, but your money is tied up in other projects and you don’t have any funds for a deposit, one route you could go down is 100% project funding.
At Tiger Financial, we understand that property developers need access to funding in order to grow and develop, that’s why we offer access to Joint Venture (JV) Development Finance – a tailored solution for developers looking to expand their portfolios through partnerships with other investors and lenders.
To apply for up to 100% JV development finance for your project, get in touch with our friendly team today. We will work closely with you to understand your business needs and create a financing plan that’s tailored specifically to you.
What is Joint Venture Development Finance
Joint Venture Development Finance is a type of financing solution that gives you up to 100% funding to finance a new property development project. It’s most typically used on residential developments, e.g. new builds or conversions etc, but it can also be used on mixed commercial property development projects too.
This type of financing allows developers to access the necessary capital to develop their property portfolio while also leveraging the expertise and resources of their partner companies.
The key benefit of this type of finance solution is that you don’t have to put up any capital yourself – 0% deposit. The development finance lenders will cover the entire development costs; from the land acquisition, to the building material costs, even labour costs.
They take on all the financial risk, however in exchange they typically require a substantial share of the profits generated by the project – usually 40-50%. The interest rates for this type of loan are also typically higher than other forms of bridging finance. However, the flipside is, by partnering with another company, experienced developers minimise their financial risk while increasing their potential returns on the project.
Because of the high risk nature of this type of loan for lenders, it’s typically only available to experienced developers with a proven track record of successfully delivering completed property development projects.
Why property developers might need 100% development finance.
Joint venture finance, also known as 100% development finance, offers a number of benefits for property developers:
One of the main benefits is that it allows developers to undertake a project without having to provide any of their own capital. This can be particularly useful for smaller developers who may not have the financial resources to fund a project on their own. Or for developers with a portfolio of properties that are yet to yield returns.
Another benefit of joint venture finance is that it allows developers to share the risks of a project with a partner. This can help to mitigate the financial risks associated with property development, and can provide a safety net in case of unexpected costs or delays.
In addition, joint venture finance can also provide access to additional expertise and resources, for example, your JV partner may be able to provide valuable insights and experience in areas such as construction, marketing, and sales.
How JV Finance Works
If your application is successful, to access the funds, you and your JV funder will set up a special purpose vehicle together. Funds are then released in instalments as the project reaches specific milestones.
When the project reaches completion, you sell the units as per your exit strategy, you repay the loan and you split the profits as agreed with your lender.
JV equity backing for experienced developers with more projects than cash
Joint venture finance is only available for established developers who have built a comparable project in the past, and who have a reasonable net position, but may be a bit light on cash.
Generally speaking, for the equity investment, the lender would usually charge an interest rate for the money as it is drawn, and then some form of profit share. Alternatively, some lenders will just split the profit 50/50 at the end.
Eligibility criteria to access joint venture development finance
If lenders are giving you funding to cover 100% of all the costs, they are taking on all the financial risk – if the project fails to complete, they’re the ones who will lose money. Which is why most lenders have stringent eligibility criteria you have to meet.
While different lenders will have different criteria given the nature of your project e.g. its size, location and property types, in the main you’ll be expected to have:
In the UK, you’ll be required to have secured planning permission before you can access joint venture property development finance. This is because lenders will want to see that the proposed development is viable and has a clear path to completion, and that the necessary approvals and permits have been obtained. Without detailed planning consent, you’ll find it more difficult to secure this type of financing for your property development project.
Why use a specialist broker like Tiger Financial to find a joint venture partner
- Knowledge and expertise: We have a deep understanding of the joint venture development finance market and can advise on the best products and lenders to suit your specific project. We can help borrowers navigate the complexities of the financing process and ensure that all requirements are met.
- Access to a wide range of lenders: We have relationships with over 700 lenders, including banks, non-bank lenders, and private investors. This increases the chances of finding the most suitable financing options, or JV partner, for your specific project, as well as getting you the best terms and interest rates.
- Speed and efficiency: We can handle the entire process on your behalf, including the application process, negotiations and due diligence. This can save time and effort for the borrower, as well as increase the chances of a successful outcome.
- Tailored solutions: We can provide tailored financing solutions that are specific to a your borrowing needs and goals. This can include structured finance, mezzanine finance and other forms of alternative financing, if JV finance isn’t available to you.
- Cost-effective: Because we have knowledge of the market and access to a wide range of lenders, we can help you find the most cost-effective financing option, and help you secure the best deal possible for you.
What We Need From You To Get Started
Joint venture finance can be a valuable tool for property developers looking to undertake a project without having to provide all of the capital themselves, and can help to mitigate the risks associated with property development.
In all cases, in order to get a full understanding of the project and the client’s funding request, we will require:
- High level executive summary of the project
- Business bio of financial sponsors
- Valuation if available
- Development appraisal
- Copy of the planning permission
- Cashflow/schedule of works
- Any CGI or drawings
- If a leasehold; tenancy schedule and lease terms
- Exit strategy and end (gross development value) GDV assumptions, including supporting documents
- Marketing and sales strategy
Big Picture Thinking, Detailed Execution
Our JV partners seek property related investment opportunities throughout the UK that offer compelling long term prospects achieved through attractive fundamentals.
Secure Joint Venture Finance with Tiger Financial
Joint venture property development finance isn’t available through mainstream lenders, it’s typically only accessed via specialist brokers, like Tiger Financial. It might seem like a difficult type of finance to secure, but if you’re eligible, we can help you get up to 100% of funds. To find out more about taking out JV finance through Tiger Finance, get in touch with our friendly team today.