A £17m facility for a 31-apartment Fulham development shows why the most important number in development finance is not always the headline loan-to-GDV. Part of the scheme has already been sold to a housing association, and the resulting proceeds will be recycled into construction of the private-sale block.
Triple Point announced on 23 September that it had provided the facility to Sotheron Developments for a mixed-use scheme just off King’s Road. The project comprises 21 private-sale apartments, ten affordable homes pre-sold to Westway/Karibu Housing Association and two commercial units.
The development also requires a double-storey basement on a constrained site. Triple Point describes the loan as its Property Development team’s largest to date, following an increase in its facility ceiling to £20m. Those facts establish scale and complexity. The useful financing lesson lies in what happens when the affordable-housing sale proceeds arrive.
Inside the £17m Fulham Facility
£17m development facility: Triple Point’s largest single property-development loan to date.
64% loan-to-GDV: the facility is structured against the scheme’s projected gross development value.
31 apartments and two commercial units: 21 homes are for private sale and ten affordable homes have been pre-sold.
Recycled proceeds: money from the affordable block will help fund construction of the private block, reducing lender exposure and the developer’s overall finance cost.
The Facility Is Financing a Sequence, Not Just a Site
A conventional summary might describe the transaction as a £17m loan at 64% of GDV. That does not show when the developer needs money, when the lender’s exposure peaks or when sale proceeds become available. Development finance is a series of cash movements: land and professional costs, enabling works, construction draws, interest, sales receipts and final repayment.
In the Fulham scheme, one block has a contracted buyer while the private apartments remain to be built and sold. If the affordable-housing proceeds are received before the private block is complete, those funds can be directed through an agreed cash waterfall and used to support the remaining construction rather than simply waiting until the end of the project.
That timing matters. A developer may have exactly the same GDV and build cost as another project but require a smaller peak lender balance because contracted receipts arrive earlier. Conversely, a project with attractive headline margin can still need more expensive capital if costs are front-loaded and all sales proceeds arrive only at practical completion.
How Recycling Can Reduce the Interest-Bearing Balance
Development lenders generally charge interest on capital drawn, not merely on the headline facility limit. If a scheme receives a material contracted payment part-way through construction, applying that money against the funding requirement can reduce the lender’s net exposure sooner.
The saving does not arise simply because the project contains affordable housing. It arises because a credible purchaser, enforceable contract and defined payment point can create an earlier source of cash. The lender and developer then agree how that cash is used: it may repay drawn debt, fund future certified costs, sit in a controlled account or move through a combination of those stages.
Triple Point says its structure reduces the developer’s overall cost of finance while preserving the funding required from day one. In practical terms, the developer retains certainty that the complete scheme can be built, but the lender does not have to remain exposed to the maximum balance for as long as it otherwise might.
Finance the Cash-Flow Profile, Not Merely the GDV
Before approaching lenders, map every reliable source and use of cash by month: sponsor equity, land payments, professional fees, build costs, contingencies, contracted pre-sales, affordable-housing receipts, deposits, commercial disposals and private sales. The peak funding requirement and timing of repayment are often more revealing than one leverage percentage.
A Pre-Sale Is Valuable Only if the Lender Can Rely on It
Not every reservation or sales memorandum will receive the same credit treatment. A lender will want to understand who the purchaser is, whether the contract is exchanged, what conditions remain, how deposits are held, when completion occurs, whether the purchaser can terminate and what happens if the development programme slips.
A contracted disposal to a registered provider or housing association may carry different weight from an off-plan reservation by an individual buyer. Even a strong counterparty does not eliminate construction, legal or timing risk. The lender’s lawyers must be satisfied that the relevant contract and security arrangements support the proposed facility mechanics.
The developer should therefore distinguish between an aspirational sale, a reservation, an exchanged contract, a forward-sale agreement and a staged funding commitment. Each can affect lender confidence and cash flow differently. Presenting all of them simply as “pre-sales” hides the information required to price and structure the risk.
| Project Feature | Potential Finance Effect | What the Lender Will Test |
|---|---|---|
| Contracted affordable-housing sale | Earlier repayment or recycled funding for later construction. | Counterparty, contract conditions, payment timing, enforceability and completion risk. |
| Phased private completions | Progressive reduction in debt rather than one final exit. | Release prices, sales pace, retained-security value and minimum-debt covenants. |
| Commercial units | Additional sale or investment value, but potentially a different exit timetable. | Use, lease evidence, valuation method, marketability and whether the units are retained or sold. |
| Complex basement or enabling works | Higher early cost and execution risk before visible value is created. | QS reports, contingency, contractor experience, programme, warranties and cost-overrun support. |
| Forward funding or staged receipts | Can reduce peak senior debt or sponsor equity if payments align with certified progress. | Milestones, control of proceeds, conditions precedent, delay risk and interaction with lender security. |
The Cash Waterfall Decides Who Benefits and When
The existence of a pre-sale does not by itself tell the developer how proceeds may be used. The facility agreement will determine the cash waterfall: which account receives the money, whether tax and transaction costs are paid first, how much reduces the senior loan, what is retained for remaining works and whether any amount can be distributed.
A lender may require all proceeds to be swept against the loan before permitting redraws for certified construction costs. Another structure may allow proceeds to remain in a controlled development account and replace future lender advances. Both can achieve risk reduction, but they have different consequences for interest, liquidity and administration.
The release mechanism also matters where parts of the site or individual units complete at different times. The lender must be comfortable that the remaining security and committed funding are sufficient after each disposal. The developer needs certainty that a sale can complete without an unexpected repayment requirement that creates a new equity gap.
Why the Double-Storey Basement Changes the Funding Conversation
Basement construction on a constrained London site can concentrate cost and risk early in the programme. Substructure works may consume substantial capital before the scheme reaches stages that are easier to value or sell. Access, party-wall issues, utilities, ground conditions and neighbouring properties can all affect programme resilience.
That makes contingency, monitoring and drawdown discipline particularly important. A facility sized only against GDV could appear comfortable while the monthly cash-flow model shows a tight period during the basement works. An experienced monitoring surveyor will test costs, progress, remaining contingency and the amount required to reach the next milestone.
The Fulham structure demonstrates why a lender can support day-one certainty while still designing exposure to fall as contracted receipts enter the project. The recycling mechanism does not remove construction risk, but it can improve the way capital is carried across the riskier and more expensive stages.
Mixed Tenure Can Create a Financing Advantage as Well as an Obligation
Developers often view affordable housing primarily through planning obligations, reduced private-sale area or margin. A contracted disposal can also provide certainty that part of the scheme has an identified purchaser and a defined receipt profile. That can materially influence the financing case.
The value is not limited to London or to one type of registered provider. Any mixed-tenure or phased scheme may contain parts with different buyers, completion dates and risk profiles. Affordable units, build-to-rent blocks, commercial space, forward-sold houses or land parcels can create earlier liquidity if contracts and construction sequencing support it.
The adviser’s task is not to assume those receipts will be treated as cash. It is to show lenders exactly when they arise, how reliable they are and how they reduce the capital required for the remaining project. A well-evidenced waterfall can be more persuasive than asking for a larger conventional facility against the end value.
Lower Peak Debt Is Not the Same as Lower Total Cost
A recycled structure can reduce interest by lowering or shortening the lender’s exposure, but total cost still includes arrangement fees, exit fees where applicable, legal costs, valuation, monitoring, commitment charges and any minimum-interest provisions. A more complex facility may require additional documentation and professional work.
The comparison should therefore model pounds, not merely percentages. Developers need a monthly schedule showing the expected drawn balance, interest calculation, timing of receipts, fees and sensitivity to delay. A facility with a slightly higher rate can cost less overall if it recognises early receipts and permits efficient recycling. A cheaper headline rate may cost more if the lender insists on carrying a larger balance or traps proceeds inefficiently.
Delay scenarios are essential. If an affordable-housing payment arrives three months later than expected, the scheme may require extra lender capital, sponsor equity or contingency. The documents must establish what happens, who funds the gap and whether the delay creates a default or merely extends the exposure.
Developers Should Present Two Models: Base Case and Downside Case
The base case should show the agreed programme, drawdowns, pre-sale receipts, private sales and repayment. The downside case should test slower construction, cost overruns, delayed contracted receipts, weaker private-sale velocity and lower values. This allows the lender to see not only that the proposed structure works, but how much resilience remains when assumptions move.
For a recycling mechanism, particular attention should be paid to the timing mismatch between costs and receipts. If the private block needs significant capital before the affordable sale completes, the lender must still commit enough day-one capacity. If proceeds arrive early, the facility must allow them to reduce or replace future borrowing as intended.
A transparent model also helps the developer compare offers. Two lenders may both quote 64% loan-to-GDV, yet one provides more usable capital at the critical stage, recognises the pre-sale properly and permits sensible redraws. The nominal leverage is the same; the practical facility is not.
Cash-Flow & Pre-Sale Structure Review
For each development, identify exchanged pre-sales, affordable-housing agreements, staged payments, deposits, phased completions, commercial receipts, grants where relevant, build-cost timing, sponsor equity and the proposed treatment of every receipt. Willow can then approach lenders with a funding structure matched to the real programme.
The Professional Team Needs to Design the Structure Together
The developer, broker, lender, solicitor, quantity surveyor, valuer, monitoring surveyor and accountant each see a different part of the transaction. The solicitor understands the pre-sale contract and lender security. The QS understands when the scheme consumes cash. The valuer tests GDV and marketability. The accountant can model the funding cost and cash waterfall.
These workstreams cannot be assembled independently at the end. If the legal contract delivers proceeds at a point that does not match the construction programme, the proposed recycling benefit may be unavailable when needed. If the lender’s release requirements were not reflected in the sale documentation, completion can create tension rather than liquidity.
Triple Point credits the structure to collaboration with introducing broker LEXI Finance and the borrower. That is the broader lesson: sophisticated development finance is usually designed through detailed engagement with the project, not selected from a rate table after planning and contracts are fixed.
How Willow Private Finance Can Help
Willow can structure and source development finance for residential, mixed-use, mixed-tenure and phased schemes. We assess land and planning status, sponsor experience, build costs, professional team, GDV, equity, pre-sales, contracted receipts, programme, contingency and exit strategy before approaching the relevant lenders.
The objective is to compare the complete facility: day-one advance, build-cost funding, peak debt, drawdown process, interest, fees, covenants, release mechanics, sales assumptions and how receipts reduce or replace lender capital. That provides a more accurate comparison than headline rate and loan-to-GDV alone.
Willow does not replace the development solicitor, QS, valuer, tax adviser or accountant. We coordinate the finance around their work, identify lender requirements early and help ensure that the legal and cash-flow structure supports the intended funding plan.
Does Your Development Receive Cash Before the Final Unit Sells?
Contracted affordable-housing receipts, phased completions, forward sales and commercial disposals can change the peak debt and total cost of a development facility.
Willow can model when capital enters and leaves the scheme, then compare lenders willing to structure around the actual cash flow rather than forcing the project into a standard template.
Arrange a Development Finance Review →Frequently Asked Questions
How contracted receipts and project timing can reshape a development-finance facility.
What does recycling pre-sale proceeds mean in development finance?
It means receipts generated by a contracted or completed disposal are applied back into the development funding structure rather than being treated only as profit or distributed immediately. The proceeds can reduce lender exposure, fund later works or both, subject to the facility terms.
Why can recycled receipts reduce development-finance costs?
Development interest is generally charged on capital drawn and outstanding. If eligible receipts reduce the lender’s exposure or replace part of the remaining lender capital sooner, the interest-bearing balance may fall. The actual saving depends on timing, pricing, fees and the agreed cash waterfall.
Does a pre-sale automatically allow a developer to borrow more?
No. The lender will examine the purchaser, contract, deposit, conditions, completion timing, enforceability and risk that the sale does not complete. A pre-sale may improve certainty and reduce risk, but its treatment is specific to the transaction and lender.
What information is needed to structure a mixed-tenure development facility?
The lender and adviser will typically need the land position, planning, build-cost plan, professional team, programme, private and affordable unit schedule, pre-sale contracts, staged receipts, commercial elements, sales assumptions, contingency, equity and proposed repayment waterfall.
Can Willow advise on affordable-housing contracts or planning obligations?
No. Those legal, planning, valuation and tax matters remain with the relevant solicitors and professional advisers. Willow can assess how the agreed obligations, contracts and receipt timings affect lender appetite, facility size, drawdown mechanics and total finance cost.