Post by shimself on May 26, 2021 14:51:17 GMT
To remove risk from the building project going awry. First offering 6.5% 50%LTV, 7.5% at 70%LTV
I might be tempted
I might be tempted
Relendex introduces Development Exit Bridge Finance
Relendex is pleased to announce that we are now offering Bridge Development Exit loans on completed, or near-completed developments.
By their nature, these loans carry less risk than our normal development loans and will offer marginally reduced interest rates on Senior loans with greater reductions on Junior loan coupons.
What is a Development Exit Bridge Loan?
Relendex usually provides loans that finance everything from the acquisition of land with planning consent, all through the construction and sales stages. Clearly, the earlier in the construction cycle we become involved, the greater the risk that something can go wrong. Cost over-runs and delays routinely happen.
From the borrower’s viewpoint, a developer understands that a loan might be expensive to account for these risks. However, once the building work is complete, or nearly complete bar the snagging and perhaps landscaping, the risks are reduced, and the borrower is paying an unnecessary premium.
This is where Relendex can step in and offer a short-term loan, typically 6-9 months to finance the sales process until completion of all sales. The borrower receives a competitive deal, and our lenders can invest in loans with minimal capital risk.
What type of return can our lenders receive?
As the principal risk is one of liquidity, not one of capital loss, there is very little risk differential between Senior and Junior loans, they are both well supported by real assets, and only the most severe downturn in property values could jeopardise the Junior loan. As such, Senior loans will be paying in the range of 6.0% - 6.5%, and Juniors around 1% more.
The first Development Exit loan is due to list at 2PM tomorrow. Look out for the listing of the Southampton (Shirley Road) Development Exit Bridge in the Coming Soon section of our Marketplace. As this is our first loan of this type the yields will be at the top of the range, at Senior 6.5% and Junior 7.5%.
We believe that these loans will make a good contribution to your overall portfolio diversification.