The costs of the scheme were projected to be £2.43m, with an estimated gross development value (GDV) of £3.03m. The developer had been offered bank funding of £1.82m, leaving an equity requirement of £578,000.
Although the developer had available funds, he wanted to use £300,000 on another site and so approached us for a mezzanine loan for this amount. He would still be putting in £278,000 of his own money, representing more than 10% of the costs. The development met our funding criteria and we were happy to make the loan.
The developer retained 81% of the profits from the scheme. This amounted to an annualised return of 123% on his cash investment, compared with an annualised return of 74% if had he funded the entire equity requirement himself. Plus, he freed up £300,000 for use on another development.
“I have used Argyll Property Partners for mezzanine funding on a number of developments and always find them highly professional and easy to deal with. I like the fact that they are so straightforward and make quick decisions. As they use their own money to lend they don’t need board approval and this makes the approval process very quick. I have no hesitation in recommending them for mezzanine funding.”
Lee Clemson, Director, Mantle Developments UK Ltd