Construction Finance

Gross Realisation Funding
Gross Realisation Funding is funding against the end value of the product. Gross Realisation Funding packages can provide up to 100% of the hard costs of a development, and up to 80% of a projects end value. In most cases, presales are not required which eases pressure on the client to discount stock to achieve sales targets imposed by the lender. As a result, Gross Realisation Funding significantly reduces the client’s personal contribution to the project, and allows clients to maximise their investment through sales on completion of their project.

Mezannine/Equity Funding
Mezzanine debt is that portion of the project funds that is subordinated to, or ranks after senior debt (prime lending) but in front of equity (contributed by the developer). Mezzanine lending is usually secured by a second mortgage. Mezzanine debt allows the developer to increase project gearing while enhancing their return on equity. This lowers the overall cost of capital to the developer. Whilst a senior (or prime lender) will typically lend 80% of project costs, the mezzanine lender will lend beyond this amount (sometimes up to 100% of costs). This debt is also not typically covered by presales, meaning that the mezzanine lender carries a higher level of project and market risk than the prime lender. A mezzanine lender will make lending decisions that are subject to stringent project and developer due diligence, prudent credit criteria, appropriate legal recourse and loan structuring. The mezzanine lender will often also take a more active role in the project by attending project meetings so as to anticipate any difficulties. Due to the application of higher risk/return principles, the return (interest rate) to the mezzanine lender will be higher than the return to the prime lender but lower than the return on equity.

Funding Against Cost
Funding against Cost, a more traditional, institution based type of lending, sees lenders advancing funds against the actual costs of a development. While traditional lending institutions require developers to contribute at least 20% of the hard costs of the development, MD Capital has access to institutions that will lend up to 80% of the developments total cost (as opposed to the hard costs which often equates to around 90% of hard costs). MD Capital also recognises the value of development approval and improving the land’s value as real equity. When supported by sufficient presales, our lenders will lend up to 90% of costs, and in some circumstances, when coupled with increased land value (with development approval), can fully fund developments. 

Landbank Funding
Borrowers requiring a holding mechanism during project start-up to cover off planning approvals, builder/tender selection etc. MD Capital has access to lenders that are prepared to lend up to 66% of land value (independent of purchase price) and in some instances up to 75% of the value.