LDS provided a Sales Guarantee and interest free cash release to D T Joseph, enabling the housebuilder to bring forward a site they had owned for some time.
Unfortunately, the project was severely impacted by Covid-19, material costs and other unforeseen circumstances. At the end of the finance term, there remained seven unsold homes, which was almost half the site, with a market value approaching £3m. The housebuilder called upon LDS to complete on the units and was able to repay the lender in full.
Andrew Fraser, Chief Commercial Officer at Assetz Capital, the senior lender in the deal, commented: “With the loan term due to expire, the developer exercised their right to call on LDS to purchase seven of the homes on the development. True to the agreement, LDS swiftly completed the purchase of these properties ensuring DT Joseph was able to repay the loan in line with the initial agreement.”
Assetz Capital has been fully repaid – including all interest and fees. The developer was able to move onto other schemes and avoid a default situation.
“Our experience of working with LDS has been extremely positive; from start to finish, the process has been smooth, with effective communication throughout. Thanks to the LDS Sales Guarantee, we were able to receive full loan repayment and avoid any potential sales delays, removing risk throughout the sales process,” Andrew explained.
LDS CEO, Mark Hawthorn said: “The LDS role is to remove uncertainty, so we are always prepared to purchase properties if called upon. As the market continues to soften, with rising rates and weakening demand, we expect to make further acquisitions for our investment portfolio.”
“This was a cash purchase concluded at short notice with minimum fuss. We have substantial reserves and underwriting capacity for new business.”
Mark Roberts, LDS Relationship Director, commented: “We are seeing increased deal flow as housebuilders and their lenders recognise the benefits of our Sales Guarantees in a down market.”
“We are also seeing situations where down valuations and increased interest costs are creating equity shortfalls, potentially killing deals. Our ability to release our 10% cash deposit can remove these shortfalls and is often the difference between a site moving forward or remaining undeveloped.”
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