District & County Investments (DCI) has provided ₤ 2.3 m in advancement financing for the conversion of Stansfield Mill near Sowerby Bridge, West Yorkshire, into 17 domestic apartment or condos. The facility was structured to include pre-agreed exit financing terms at origination, eliminating the need for different refinancing upon completion.
The dual-phase structure combined development funding with a shift to lower-cost exit financing once useful completion was accomplished. According to DCI, this approach offered the debtor with expense certainty throughout the job and eliminated refinancing threat at the completion phase.
Structure and execution
Rather than dealing with advancement and exit financing as different deals, DCI incorporated the transition mechanism into the initial facility. The funding expenses were created to reduce as advancement threat minimized through the develop stage.
“The financing was developed to transition to a lower expense of capital once the development finished, providing the debtor certainty on both delivery and rates,” stated Michael Clifford, commercial director at District & County Investments.
DCI moneyed both the land acquisition and building costs, with its exposure repositioning as the task advanced from advancement phase to finished standing possession.
Market ramifications
The structure addresses a typical difficulty in advancement finance, where customers face uncertainty when looking for refinancing mid-project. By pre-agreeing exit terms at origination, designers prevent renegotiating throughout the completion phase when their negotiating position may be weaker.
For the lender, completing the develop cycle through to a standing residential asset minimizes credit risk direct exposure. The 17 homes represent finished, salable security instead of development-stage security.
Clifford kept in mind that the approach lined up interests across the transaction: “The community gain from new homes, the customer gain from minimized costs and certainty, and we take advantage of a de-risked, premium asset.”
Sector context
The deal reflects a pattern among some development lenders towards integrated financing structures on smaller sized domestic schemes and conversions, where exit stage lending institution appetite can be less predictable than on larger advancements.
DCI suggested it continues to use bridging and development finance facilities with comparable structural techniques, focusing on execution speed and deal lifecycle positioning.
The Stansfield Mill scheme includes 17 high-specification flats to the regional real estate supply in the Sowerby Bridge area.