Hampshire Trust Bank (HTB) has completed a £1.6m development finance facility for a residential scheme in Barford, Norfolk.
The 16-month facility funds the construction of four freehold homes and the servicing of a further two residential plots.
The developer is also delivering another property through a separate build contract, while two of the homes funded by HTB will be sold as Discount Market Sale properties for local owner-occupiers.
The facility establishes a new relationship between HTB and the experienced regional developer, with discussions already under way about future opportunities.
FUNDING PACKAGE RESTRUCTURED
A key source of funding was withdrawn late in the process, requiring HTB and the borrower to restructure the deal before it can proceed.
The lender increases leverage to 65% loan-to-gross-development-value, with the borrower contributing additional equity to complete the revised funding package.
The transaction also involves affordable housing requirements, nutrient neutrality obligations and detailed planning and legal considerations. Changes within the wider professional team add further complexity during underwriting.
HTB says its revised structure enables the facility to complete with minimal delay and keeps the development on track.
SUSTAINABILITY MEASURES
The scheme incorporates low-carbon heating systems and nutrient neutrality measures, supported by the purchase of nutrient credits.
A new treatment plant is also being installed to reduce the development’s environmental impact.
Alexia Evans (main picture), lending director at Hampshire Trust Bank, led the transaction with support from relationship manager Olivia Emmett. Savills acts as valuer, Wilson Edwards as monitoring surveyor and Glovers provides legal advice.
RELATIONSHIP-LED APPROACH
Evans says: “Although the development itself was relatively straightforward, the transaction became significantly more complex as it progressed. Our role was to respond proactively as the transaction evolved, restructuring the funding package and working with the borrower and wider professional team to navigate each challenge while keeping the transaction moving towards completion.
“By adapting the funding structure to changing circumstances, we were able to support the borrower through to completion. That’s exactly what relationship-led development finance is about, and we’re delighted this transaction marks the beginning of what we hope will be a long-term relationship.”
Neil Leitch, managing director of development finance at Hampshire Trust Bank, adds: “Transactions like this are becoming increasingly common.
“Good schemes are rarely held back by a lack of demand or developer capability. More often, they encounter evolving requirements, changes to funding structures or unforeseen issues that emerge as projects progress.
“For experienced developers, having a lender that can respond to those challenges can make the difference between a project stalling and a project being delivered. Our role isn’t simply to provide funding at the outset, but to work alongside borrowers as projects evolve and help keep viable developments moving.”
