Property development finance can become particularly complex when a project involves multiple buildings, substantial renovation works and an overseas location. I recently assisted a property professional who was looking to secure development finance for a significant project in Cannes, in the south of France.
The client had originally built a successful international career as an architect for a major global brand before moving into professional property development. He was now looking to acquire a site comprising a substantial main property and two smaller outbuildings, with the intention of renovating the buildings and selling them once the development was complete.
Development finance had already been arranged for the main property, but the two outbuildings presented a more complicated funding requirement. They required a greater degree of renovation, and the client needed to secure additional finance within a relatively tight timeframe to keep the wider project moving.
The client therefore needed a lender that understood the local property market and was comfortable assessing the development as part of a wider project rather than viewing the two buildings in isolation.
I approached a specialist lender in the region that focuses on property development projects. These lenders, sometimes referred to as Marchands de biens, have a detailed understanding of their local markets and the types of development they are prepared to finance.
My existing relationship with a lender operating in the area meant I could present the project to a bank that was familiar with the local market and comfortable considering the proposed development.
The lender was able to provide the full funding required for this part of the project, allowing the client to preserve more of his own capital for other development opportunities.
The resulting facility was €10 million, arranged on a four-year, interest-only basis at a margin of 1.2% at the time. This provided the client with the funding required to progress the renovation works while maintaining greater liquidity across his wider property business.
The case highlights the importance of specialist property development finance expertise when funding complex projects overseas. Local lender relationships can be particularly valuable where the property, development strategy and borrower's requirements fall outside conventional lending criteria.
For property professionals developing assets in France, specialist international mortgage and development finance expertise can help identify lenders familiar with the local market and the specific requirements of the project.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, property suitability, development viability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.
Risk Warning:
Property and other assets used as security may be repossessed if repayments are not maintained. Property values can fall as well as rise. Property development projects can also be subject to construction delays, planning issues and cost increases, which may affect the overall financing position.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
