Joint Venture Property Development Finance
A joint venture property development finance is a business arrangement between two or more parties that agree to combine some of their resources for a particular purpose. In the property sector, developers will typically join forces to compensate for aspects of their project they lack in, for instance, finance.
If a developer is unable to fund a potential project by himself, he will search an investor who can obtain the gap between his level of equity and the capital that is needed to realise the project or the investment.
There are different options for JV funding with various potential partners for a joint venture (JV) agreement, we at property finance partners structure and offer the right JV according to the interest and needs of our clients.
The potential partners for a JV vary and include Equity funds, Debt funds, and Real Estate funds, Finance firms, corporate or private investors, property developers, and Landlords.
Joint Venture Property Development
JV property development Option 1
A developer has secured a potential project to convert a big old house with a garden to flats.
The developer capital is deployed in other projects; therefore, he would like a JV Partner to provide most of the funding needed.
The projects gross development value (GDV) is £ 3,200,000
Total (purchase and development) project costs are £ 2,500,000
The developers’ contribution to the deal (5%) £ 125,000
The Joint Venture partner (an investment firm) £ 2,775,000
The developer has secured a joint venture agreement the funds and can realize this project
JV property finance Option 2
A developer has secured land with planning in place (subject to S 106) to build a mix residential and commercial project.
The period of the project was 30 months to build and six more months to finish the wholesales.
The developer has made his financial calculations and appraisals and decided to find a Joint Venture property development finance Partner that can support him without any pressure and provide him with all the finance that he needs for the project.
The projects gross development value (GDV) is £ 38,200,000
Total (purchase and development) project costs are £ 28,500,000
The developers’ contribution to the deal (full JV) £ 0
The JV partner (a Real Estate Investment Group- structure of 2 funds) £ 28,500,000
The developer has secured the funds and can realise this project by using a joint venture agreement.
Joint Venture partnership Option 3
A developer has bought land with planning in place (subject to S 106) to build a residential project.
The developer is interesting to build to rent, keeping the portfolio as PRS (Private rented sector) project
The period of the project was 24 months to build and 12 months to finish to rent 100% of the project.
The developer approached property finance partners, and we have made with him the financial appraisals and decided together to find a 100% development finance JV Partner with the same strategy to build to rent, keeping the portfolio as PRS (Private rented sector) project.
The JV partner shares the same strategy and can support the developer with the funding needed without any pressure.
The projects gross development value (GDV) is £ 59,000,000
Total (purchase and development) project costs are £ 43,500,000
The developers’ contribution to the deal (full JV) £ 0
The JV partner (a Real estate fund-equity & debt) £ 43,500,000
The developer has secured the funds and can realize this project by using a joint venture agreement.
The fund strategy offers three exit possibilities
A) After five years- to buy out the developer.
B) To co-manage the assets for the long run.
C) To sell together to a pension fund.
There are different ways to structure the right JV.
To find out how we can assist you to find the right JV partner,
Call today on 020 3393 9277
