Case Study: Development Funding Rescue During Pandemic.

978 Finance rescue development funding for Mr. Gregg who's lender pulls loan without prior warning during pandemic.

Mr Gregg approached 978 Finance after suffering a false start on his development last year. His project began in early 2020, but shortly thereafter it started to experience a series of potentially catastrophic delays. The project was initially stalled by delays discharging some basic pre-commencement conditions, caused by general administration mix-ups in the local authority. Then, after investing nearly £8000 on a valuation, the Covid-19 pandemic hit with full-force. Mr. Gregg believed his situation could not possibly get any worse, this was until his chosen lender decided to pull the plug on his development funding literally over-night. 

Mr Gregg had owned his development site for several years prior to this looming disaster and the planning permission expiry clock was ticking loudly. Consequently, Mr Gregg knew that he had no choice but to quickly find a viable funding solution.

On a positive note, sign-off of the development’s drainage scheme and finishes, which had been delayed since the previous spring, was now in the process of being approved by the council and Mr Gregg was determined to break ground as soon as those conditions were satisfied. 

During his search for a fast solution, Mr Gregg saw that 978 Finance were still active and operating during the pandemic. Having met with Simon Das at previous networking events and seminars, he thought it could be worth reaching out to the 978 Managing Director for help. 

Mr Gregg knew that Simon had built his reputation on finding solutions to complex development financing conditions. Indeed, Mr Gregg’s development had a complex build criterion, involving retention of existing commercial units and a new build element, and with supply chains and funding lines faltering throughout the odds were stacked against him. Simon and his 978 Finance team set to work by meticulously contacting close to forty lenders.

In record time, the team secured six sets of proceedable terms, and managed to find two lenders that were able to get surveyors out in a reasonable timeframe during the pandemic. Interestingly, one of these two lenders had the surveyor on their panel that attended Mr Gregg’s site in the first instance. By the time the pre commencement conditions were finally satisfied nearly 6 months had passed since the original valuation. Nevertheless, the surveyor was happy to do a quick site visit and use a lot of the previous survey work saving nearly £5,000.00 on a new valuation. Ultimately, the valuation was pushed back a little due to material uncertainty, however, the surveyor fulfilled their promise, and in late November they inspected the site and came in within 4% of their pre-covid valuation. Being relatively well capitalised this was not an issue for Mr. Gregg and his team broke ground in January 2021, just 8 weeks before the expiry of the planning permission. Consequently, the team are well on their way to creating 26 new homes and the development should be complete by the end of the year.

Mr Gregg was thrilled with the solution that 978 Finance provided in such a challenging climate. 978 Finance successfully managed to fund his development project, extending the loan term for additional comfort mid-pandemic, lowering his original rate, and practically matching his pre-covid development finance deal during the pandemic. 

Pre-Covid Terms (Revoked by Client's lender).

·       Gross Loan £4.02m

·       15 Month Term

·       2% Arrangement Fee

·       0.72% pcm

978 Finance Terms (Funding Rescued during Pandemic)

·       Gross Loan £3.87m

·       18 Month Term 

·       2% Arrangement Fee 

·       0.69% pcm 

·       1% Exit

If you want to chat about any aspect of commercial property funding, please call Simon today on Tel. 01524 889 978 or email: simon@978finance.com. We want your business.