Avamore Capital has provided a c.£775K loan to help a developer complete a part-built project. The scheme was at first floor brickwork when the borrower required additional funds. The specialist market does not broadly fund part complete development projects – with many not being able to determine the strength of the deal to date – however Avamore Capital, the pioneer of the Finish & Exit funding product is able to support under these circumstances.

The borrower had originally planned to self-fund the project through the sale of an additional plot however, this fell through; a scenario which is becoming increasingly common in the development market. The UK lockdowns have resulted in cost overruns and unexpected delays for many projects which is leaving developers stuck on part finished schemes without sufficient funds left to complete. The borrower for this project had begun the initial works on the development site and was at first floor brickwork stage when he faced cashflow constraints. Avamore Capital was able to work closely with the Monitoring Surveyor and use in-house expertise to assess the level of works to date and the strength of the final scheme.

Following acceptance of the initial offer, the lender, alongside the Monitoring Surveyor was able to identify additional opportunities to help with the borrower’s cash flow. Avamore had the flexibility to provide funding to the borrower for some of the works already completed on site. Accordingly, the day 1 leverage was increased by c.£142K moving from 40.7% to 62.5% and the overall LTGDV of the project moved from 49.7% - 67.1%; this change in terms did not affect the economics of the transaction and did not slow down completion.

The finished units will be 2 x4 bedroom properties with a GDV of £1,240,000. The scheme is a short drive from Market Harborough train station which provides direct links into Leicester in 15mins. The homes will be attractive to young families in the local town.

Adam Butler, Relationship Manager commented:

“It was great to get this deal over the line especially as it is representative of the current market. The borrower was facing challenges specifically driven by COVID and we were able to step in and support. Right now, providing relevant solutions to real time challenges is more important than ever. We are customer centric and solution driven and this ethos is reflective in our products and services. We look forward to providing more support to SME property developers in southern and central England.”