Secure 90% of the equity requirement of your UK property development scheme's total cost from our equity investor

We have a truly unique funding solution for established UK property developers with strong track records who want to scale.

Product parameters:

For qualifying developers and schemes:

• Our investor will fund 90% of the equity requirement of your scheme's total cost. Funds will be released in stages in line with the scheme’s needs.

• Debt/equity mix: Our investor will decide whether to fund your scheme’s total cost entirely in equity (typically smaller schemes) or through a mix of debt and equity (typically larger schemes). If they decide to fund part of your scheme's total cost with debt, then Langdon Capital will source the debt for your scheme.

• You will receive a profit share of up to 50%, subject to negotiation with our investor.

Qualifying criteria - developer:

1. You must inject 10% of the equity requirement of the scheme's total cost (land/site purchase cost, professional fees, construction costs/cost of works) to demonstrate equity alignment with our investor.

2. You must be an experienced UK property developer with a track record of profitably exiting at least three schemes of a similar size and nature to the scheme you are seeking to fund.

3. Provision of a detailed financial appraisal, demonstrating an expected profit on cost of 20%. The construction cost/cost of works should be supported by a quantity surveyor's input. The GDV estimate should be supported by sales comps. Professional fees and a 10% contingency budget should be included.

4. Provision of a comprehensive information pack including a description of the scheme, team biographies, track record, the scheme's location specifics, floor plans for the final product, spec sheets specifying materials used in each room type of the final product, CGI images of the final product.

Qualifying criteria - scheme:

1. The scheme should be in London, close to London or in another major UK city.

2. No planning risk. Full planning permission or permitted development rights must be obtained.

3. Profit on cost of 20% or more.

4. Minimum equity cheque written of £2m.

5. Maximum equity cheque written of £50m.

Q&A: Key terms explained

Q: What is a scheme's total cost?

A: The full cost of delivering a development: the land or site purchase, professional fees and construction costs, or cost of works. It is the figure against which the equity contributions and profit on cost are measured.

Q: What is the equity requirement?

A: The part of total cost funded with equity rather than borrowing. Here the developer provides ten per cent and the investor the remaining ninety per cent.

Q: What does skin in the game mean?

A: A developer's own capital placed at risk in a scheme, aligning their interests with the investor's because both stand to gain or lose together.

Q: What is profit on cost?

A: A scheme's forecast profit expressed as a percentage of its total cost. Twenty per cent means the profit is expected to equal one fifth of everything spent to deliver it.

Q: What is gross development value (GDV)?

A: The total open-market value of the completed development, usually the sum of the sale prices of all the units.

Q: What are sales comparables?

A: Recent sale prices of similar nearby properties, used to evidence that the GDV assumed in an appraisal is realistic.

Q: What is a quantity surveyor?

A: A construction cost professional who measures and verifies the cost of works, giving investors confidence that the build-cost estimate is credible.

Q: What is a contingency budget?

A: A reserve, here ten per cent of cost, held within the appraisal to absorb unforeseen expenses such as overruns or delays.

Q: What is a financial appraisal?

A: The developer's detailed model of a scheme, combining GDV, costs, fees, contingency and finance to demonstrate the expected profit on cost.

Q: What are permitted development rights?

A: Rights allowing certain works or changes of use without a full planning application, giving a settled basis on which a scheme can be built.

Q: What is a profit share?

A: The division of a scheme's profit between developer and investor. Here the investor takes up to fifty per cent, with the split agreed by negotiation.

Q: What is the difference between debt and equity?

A: Debt is borrowed money repaid with interest and ranking ahead for repayment; equity is invested capital that shares directly in profit and loss.

Enquiries

To enquire, please contact info@langdoncap.com

About the author

Sabbir Rahman is Managing Director of Langdon Capital. He has held prior roles with Morgan Stanley, Lazard and Deutsche Bank. He has executed over £200 billion in notional value of debt, equity, M&A and derivatives transactions with global corporates, private equity funds and financial sponsor groups.

About Langdon Capital

Langdon Capital raises debt and equity for businesses with EBITDA between two million and twenty million pounds from private credit funds, banks, private equity firms, special situations funds, family offices and venture debt funds. We raise capital to fund acquisitions, organic growth and turnaround situations. We hold direct relationships with key decision makers including CIOs, Heads of Direct Lending, Partners, MDs and Fund Principals at leading multi-billion pound, dollar and euro AUM global institutional investors, and provide our clients with swift, direct market access.

contact info@langdoncap.com | visit www.langdoncap.com

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