Pivot launches development finance loan powered by LDS Sales Guarantees
Development and bridging lender Pivot has announced the launch of a new development finance offering with an in-built LDS Sales Guarantee.
The new facility will provide SME housebuilders and their brokers with the option of taking out a Pivot senior lend combined with an LDS Sales Guarantee.
LDS offer a unique service guaranteeing to acquire any unsold units on a site. This removes all speculative risk, allowing lenders to increase their leverage whilst reducing risk. LDS can also release their 10% cash deposit to developers, unsecured and at zero coupon. The combination of these factors is transformative on the viability of sites for developers and brokers.
The new product follows a successful pilot on an £1.85m scheme, in which Pivot and LDS partnered to fund the development of 8 new houses in Norfolk. The loan was used to support the purchase of the site in King’s Lynn, and will fund 100% of the build costs for the product.
With speculative risks removed, Pivot was able to accept an equity contribution of just 8% of total costs from the borrower. The first charge loan was secured against the site at 65% LTGDV with a rate of 9.5% pa over a term of 18 months.
Alongside the 10% cash deposit from LDS, this has enabled the developer to progress on the site, turning a disused, formerly commercial site into eight new three- and four-bedroom homes.
This was the first loan facility that Pivot have provided using LDS’ innovative Sales Guarantees. With the launch of the joint product, the two companies are aiming to support more SME developers across the UK to bring forward housing.
The Pivot loan combined with LDS Sales Guarantee will be available to developers looking to fund housing schemes in England and Wales, ranging from 10-30 units, where the GDV is greater than £3m.*
Brokers will also be able to benefit from the combined offering, receiving additional fees from LDS on top of the Pivot procurement fee, and better conversion rates due to the increased leverage and reduced equity contributions for clients.
Mark Roberts, senior relationship director at LDS said: “Only rarely in our market is a scheme developed where there are obvious and clear opportunities for all parties involved. As development finance experts, Pivot were quick to understand the benefits that our Sales Guarantees bring to SME housebuilding projects. For our first combined offering, we worked together through the due diligence process with the developer, and successfully delivered a unique solution to support the scheme in Norfolk. We’re confident that we can now harness this joint product to empower even more SME housebuilders by transforming the viability of their sites.”
Shahil Kotecha, CEO at Pivot said: “We’re very glad to be able to continue to support the SME housebuilder community and through our relationship with LDS we now have a powerful combined solution that minimises their equity contribution. With several more deals already in the pipeline with LDS we are looking forward to more completions imminently.”
*LDS can consider schemes up to 60 units but Pivot cap at 30 units. Schemes that do not meet these parameters will be considered by exception.