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The Client’s Initial Challenge
This was the client’s first development scheme, though they had strong project management experience with a large PLC housebuilder. The project involved the refurbishment of an existing farmhouse and seven new builds, with a significant planning uplift in place.
Key challenges included:
- A light asset position with only a 5% personal guarantee
- An expiring bridge facility and a tight completion deadline
- Private investment that also required repayment
- No main contractor appointed at the outset
The Magnet Capital Approach
We focused on understanding the client’s professional background and ability to deliver. By meeting face-to-face, we gained confidence in their management capability, supported further by their engagement of a development consultancy to oversee costings, tendering and contractor management.
To strengthen the security position, we introduced a guarantor with an unencumbered main residence and a small investment portfolio, which provided additional comfort given the loan size.
Working collaboratively with brokers, lawyers, surveyors, and the existing lender, we secured a short extension on the bridging loan, allowing time to complete legals and structure the transition. With no contractor finalised, the day-one facility was completed to clear the bridging loan, with development due diligence agreed post-completion and prior to first drawdown.
To meet the desired leverage, we factored in planning uplift and pre-construction costs, ensuring the structure sat comfortably within LTC parameters.
Magnet capital delivered a £3.6m development finance loan at 65% LTGDV at 10.80% p.a. The result was a no-money-in deal for the client. Their planning gain and sweat equity were recognised as their contribution to the project, providing a clear, well-structured facility tailored to their position.
The Power of Partnership
This facility allowed the client to clear an expiring bridging loan within the deadline and progress the project without interruption. By recognising both the client’s planning uplift and professional experience, we were able to deliver a no-money-in structure that reflected the true value they had already created. The deal also showcased the strength of collaborative problem-solving, with brokers, professionals and our team working closely to get it over the line.
Most importantly, it demonstrated our ongoing commitment to supporting first-time developers with flexible, well-considered funding when others might have stepped back.
"This project demonstrated our willingness to sit around the table with the client and structure a facility that genuinely worked for them. We bought into their ambition, worked closely through the detail, and helped them take an important step forward with the project."
