Development finance is used to fund property projects such as townhouses, apartments, land subdivisions and commercial developments.
Many projects are funded through a combination of senior debt, mezzanine finance and equity.
What is senior debt?
Senior debt is usually the primary loan secured against the development site. It is generally the lowest-cost layer of funding because it has the first-ranking mortgage position.
What is mezzanine finance?
Mezzanine finance is an additional layer of funding that sits behind senior debt. It can help developers reduce the amount of equity they need to contribute, but it usually has a higher cost due to higher risk.
What is equity funding?
Equity funding may come from the developer’s own funds, investors or joint venture partners. Equity investors may share in the profits of the project.
What lenders assess
Development funders review:
- Site value
- Planning approval status
- Builder and construction contract
- Feasibility
- Gross realisation value
- Developer experience
- Presales or sales strategy
- Exit strategy
Why structure matters
A poorly structured funding stack can reduce profit or delay the project. A well-structured facility aligns funding with project timing, build costs and sales outcomes.
How Nine Fincap can help
Nine Fincap assists developers with senior debt, mezzanine finance, private funding and joint venture funding options.
Need funding for your next project? Submit Your Development Deal to Nine Fincap.
Disclaimer
This information is general only. Development funding is subject to feasibility, valuation, lender approval and project risk assessment.