How does Telos Capital structure Senior Property Development Loans?
Senior Development Loans are structured so projects are fully funded when the loan completes, meaning development projects do not require any additional equity investment through the build and exit. As such, developers are required to invest their equity investment into the project ‘first’, with the Senior Development Loan making up the difference in the project’s total cost.
The amount a Developer needs to invest as their equity is therefore determined by the amount of the Senior Development Loan.
Telos Capital lends up to 70% Loan to Gross Development Value (LTGDV) and 85% Loan to Cost (LTC).
Telos Capital allocates the loan to the project costs in the following order:
Construction Costs (and professional fees, etc.);
Interest and Fee Reserve; and
The Land Loan.
The Interest and Fee Reserve amount is determined by the loan amount, interest rate, terms and other factors.
The Land Loan amount represents the balance of funding up to 70% LTGDV / 85% LTC after the construction costs and interest and fee reserve and up to 75% of the loan/property's current value (LTV).
The developer's equity investment therefore makes up the difference between the Senior Property Development Loan amount and the project's total costs (inclusive of interest and fees).
The developer's equity investment can be either land/property value (or uplift) and/or cash equity.
You can visualise senior development finance and equity capital stack below:
For more information see our Development Finance page and our Development Finance FAQs.
How can I apply for a Property Development Loan?
To apply, call us on 0207 459 4562 or email us at contact@teloscapital.co.
If your loan meets our lending criteria, we will start the application process. For more information about this process, see our Development Loan Application Process.