After a highly successful pilot scheme, development and bridging lender Pivot have officially launched a development finance loan with an in-built LDS Sales Guarantees.
The new product follows a pilot on an £1.85m scheme, in which Pivot and LDS partnered to fund the development of 8 new houses in Norfolk. The loan was used to support the purchase of the site in King’s Lynn, and will fund 100% of the build costs for the product.
Brokers will also be able to benefit from the combined offering, receiving additional fees from LDS on top of a Pivot procurement fee, and better conversion rates due to the increased leverage and reduced equity contributions for clients.
With speculative risks removed, Pivot was able to accept an equity contribution of just 8% of total costs from the borrower. The first charge loan was secured against the site at 65% LTGDV with a rate of 9.5% pa over a term of 18 months.
Alongside the 10% cash deposit from LDS, this enabled the developer to progress on the site, turning a disused, formerly commercial site into eight new three- and four-bedroom homes.
This was the first loan offering that Pivot have provided using LDS’ innovative Sales Guarantees. With the launch of the joint product, LDS and Pivot are now aiming to support more SME housebuilders to bring forward new housing.
“We’re very glad to be able to continue to support the SME housebuilder community and through our relationship with LDS we now have a powerful combined solution that minimises their equity contribution. With several more deals already in the pipeline with LDS we are looking forward to more completions imminently.”
Shahil Kotecha, CEO at Pivot
“Only rarely in our market is a scheme developed where there are obvious and clear opportunities for all parties involved. As development finance experts, Pivot were quick to understand the benefits that our Sales Guarantees bring to SME housebuilding projects. For our first combined offering, we worked together through the due diligence process with the developer, and successfully delivered a unique solution to support the scheme in Norfolk. We’re confident that we can now harness this joint product to empower even more SME housebuilders by transforming the viability of their sites.”
Mark Roberts, Senior Relationship Director at LDS
How exactly does an LDS Sales Guarantee with a bespoke Pivot senior loan transform scheme viability?
Below is a basic comparison on a £10m scheme.
(*) cash/equity contribution required is deal specific and between 5-10%
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