Enhanced senior debt facilities offering higher leverage than standard development finance, reducing equity requirements for experienced developers.
Stretched senior finance provides development funding at higher loan-to-cost and loan-to-GDV ratios than traditional senior development finance. This product is designed for experienced developers who want to maximise leverage and reduce the equity required for their projects.
By offering up to 90% of costs and 75% of GDV through a single facility, stretched senior eliminates the need for separate mezzanine funding in many cases. This simplifies the capital stack, reduces overall funding costs, and provides a single point of contact throughout the development process.
Stretched senior solutions are available for residential and mixed-use developments from established developers with proven track records. Lenders assess projects on their merits, considering location, scheme design, developer experience, and market conditions to determine appropriate leverage.
Stretched senior combines what would be senior (65% LTC) and mezzanine (additional 15-25%) into one facility. Single lender, single set of fees, single legal process.
Rates reflect the blended risk across the capital stack. Often comparable to or lower than separate senior + mezzanine arrangements when total costs are considered.
Typically requires 3-5 completed similar projects. Lenders want proven track record of delivering on time and budget. Strong professional team can compensate for less experience.
Understanding the right scenarios ensures you're using this finance type strategically.
Experienced developers seeking to minimise equity contribution and maximise project pipeline.
Projects where separate facilities would be required, simplifying structure and reducing costs.
Developers with ongoing project pipelines seeking consistent lending relationships.
Schemes with 25%+ profit margins where high leverage is achievable within risk parameters.
| Cost Component | Typical Range | Notes |
|---|---|---|
| Blended Interest Rate | 10% - 15% p.a. | Single rate across facility |
| Arrangement Fee | 1.5% - 2.5% | Single fee, not two |
| Exit Fee | 0% - 1.5% | Some lenders charge |
| Monitoring | £500 - £1,500/visit | Standard QS monitoring |
| Valuation | £2,000 - £5,000 | Full development appraisal |
| Legal | £3,000 - £6,000 | Single legal process |
Assess developer experience and capability for stretched senior eligibility.
Review project viability, margins, and suitability for high leverage.
Match project with appropriate stretched senior providers.
Detailed due diligence including experience verification.
Single facility completion covering all funding requirements.
| Aspect | Stretched Senior | Alternative |
|---|---|---|
| Leverage | Up to 90% LTC | Senior: 60-65% LTC |
| Structure | Single facility | Senior + mezzanine = 2 lenders |
| Cost | Blended 10-15% | Combined often higher |
| Complexity | Single relationship | Dual lender coordination |
Standard senior development finance typically offers 60-65% of costs and 60-65% of GDV. Stretched senior extends this to up to 90% of costs and 75% of GDV, significantly reducing the equity developers need to contribute. It essentially combines senior and mezzanine into one facility.
Stretched senior is typically available to developers who have completed at least 3-5 similar projects successfully. Lenders want to see a proven track record of delivering developments on time and budget. First-time developers would normally need to start with standard senior facilities.
Often the blended rate of stretched senior is comparable to or lower than combining separate senior and mezzanine facilities. You also save on duplicate arrangement fees, legal costs, and the complexity of managing two lender relationships. Total cost of capital is typically competitive.
Most stretched senior lenders require minimum profit margins of 20% on GDV to ensure sufficient buffer for the higher leverage. Projects with margins below this threshold may need to use standard senior finance with lower LTC/LTV ratios.
Standard senior offers 60-65% of costs and GDV. Stretched senior extends to 90% LTC and 75% LTGDV, essentially combining senior and mezzanine into one facility. Reduced equity requirement, single lender relationship, simplified structure.
Typically 3-5 similar completed projects successfully. Lenders want proven delivery track record. First-time developers would normally need standard senior facilities. Strong professional team can partially compensate.
Often the blended rate is comparable or lower than combining separate facilities. You save on duplicate arrangement fees, legal costs, and managing two lender relationships. Total cost of capital is typically competitive.
Most lenders require minimum 20% profit on GDV to ensure sufficient buffer for the higher leverage. Projects with margins below this may need standard senior with lower LTC/LTGDV ratios.
Dedicated stretched senior specialists with deep market knowledge.
Access to an extensive panel of specialist lenders.
Adhering to strict professional and ethical standards.
Proven track record in property finance.
Our local specialists understand the property market in your region and can provide tailored advice.
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