How does Stretched Senior Debt work?
Senior stretch loans are a more flexible option for property development finance. As the name suggests, the senior debt facility can be “stretched” to meet the needs of the borrower, covering up to 75% LVR or 90% of the total development costs. This type of loan effectively combines senior debt and junior debt into a single package.
Stretch construction finance is typically only available to experienced developers given their contribution will be a much smaller percentage of the overall costs. It is a convenient form of financing for the borrower to have more of their development funded, but carries a greater risk for the lender which means higher interest rates.
The loan amounts available for stretched senior debt are comparable to mezzanine financing, but stretched debt requires fewer stakeholders. This can make stretch construction finance more affordable as all the funding is arranged through the one lender which means faster turnarounds and fewer professional fees to cover.
“We have worked with Dan Holden to finance our projects since 2009, we have always found him to be reliable and has always delivered. We have completed multiple projects under his funding guidance. Dan adds much more than just funding to our group. Even through the credit constrained times Dan always ensured we had the right loan to suit our requirement.”
CONSTRUCTIVE FINANCE
Key Features of Stretch Construction Finance
THE BENEFITS
How can Stretched Senior Debt from
HoldenCAPITAL Partners help with your projects?
Stretch construction finance allows property developers to better utilise their capital across multiple projects at once. Conventional senior loans might require the borrower to contribute up to 35% of the total cost using their own cash or equity and they won’t see a return on that investment until the project is completed. This can make it difficult to move on to the next development.
Stretched senior loans provide more funding from the lender and therefore require less equity on each project, significantly increasing the borrower’s return on investment. HCP can provide funding for up to 90% of the total development costs through a stretched senior debt facility. It is the ideal solution for developers who have a limited amount of capital and several projects ready to start construction.
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“Trusted and delivers, thanks to you and your industry leading team for your valued partnership, referrals, guidance and support over the past year, we very much look forward to working with you and your world class team indefinitely”
Contact us if you have any questions or submit a scenario for stretch construction finance.
