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WHAT ARE THE TYPE & SIZE OF RESIDENTIAL DEVELOPMENTS BEING FUNDED? |
| A. |
CALMEZ is seeking developers of new residential developments of up to 10 houses with total sales values ranging from £500K GDV to £5M GDV |
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| Q? |
WHAT IS MEZZANINE DEVELOPMENT FUNDING? |
| A. |
It is the difference between the total cost of a development (including the cost of the land) less the amount the senior debt provider is prepared to lend (1st charge)- after first deducting the developer's equity contribution of a minimum 10% of total funding requirements. |
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| Q? |
HOW MUCH EQUITY DO I NEED TO PROVIDE?
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| A. |
Developers are required to provide a minimum of 10% of the total cost of the development which includes land, build costs and professional and finance costs (including rolled-up interest).
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| Q? |
WHAT PERSONAL GUARANTEES ARE REQUIRED? |
| A. |
Your personal guarantees are limited to cover the value of the cost overruns only. This guarantee strengthens your build cost warranty and offers the lenders protection against any cost overruns. |
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| Q? |
HOW LONG WILL IT TAKE TO APPROVE AN APPLICATION? |
| A. |
We will approve the application in a week and expect to have the funding approved within 4 weeks. |
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| Q? |
CAN I USE MY OWN CONTRACTORS OR MUST I USE YOURS? |
| A. |
We are more than happy for you to use your own contractors provided you have not had previous problems with them and we can see some previously completed projects and the developer is either NHBC registered or the construction has BLP insurance cover. |
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| Q? |
WHAT HAPPENS IF I IMPROVE THE PROFITABILITY BY REDUCING BUILD COSTS AND / OR ACHIEVE HIGHER SALES PRICES? |
| A. |
CALMEZ calculates its profit share on the projected figures submitted by you to us (and the senior debt provider) and this profit share is then expressed as a Sterling amount and not a percentage in our loan documentation. Any increase in the profit figure (over and above the profit figure stipulated above) accrues 100% to the developer. |
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| Q? |
IF DURING THE BUILD OUT OF OUR CURRENT PROJECT, I COME ACROSS ANOTHER SITE, WILL YOU CONSIDER FUNDING IT? |
| A. |
We are looking to build long-term relationships. Therefore, we would certainly consider the second site, providing the current one is going according to plan and we are satisfied that you are not over-stretching yourself. |
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| Q? |
WHO IS CALMEZ? |
| A. |
CALMEZ is a company with a “hands-on” management team of experienced property developers and financiers.
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| Q? |
WHAT SENIOR DEBT PROVIDERS DO CALMEZ USE? |
| A. |
CALMEZ have the support of major specialised property bankers including Close Brothers and United Trust Bank.
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| Q? |
WOULD YOU OBJECT TO US USING OUR OWN PRIME LENDER? |
| A. |
We would prefer to work with our selected prime bankers to synchronize our documentation and procedures, whereby we are able to provide very quick loan offers.
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| Q? |
WHAT ADDITIONAL FUNDING COSTS ARE INVOLVED TO ESTABLISH THIS MEZZANINE LOAN? |
| A. |
The costs are in line with generally accepted levels: |
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Arrangement fee: 1% on value of loan
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Legal fees: 1% on value of loan (estimated)
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Valuation: 0.1% GDV (estimated) |
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Draw-down fees: £500/£1000 (monthly) |
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Brokers fee (Mezzanine debt): 1% on value of loan
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| Q? |
WHAT HAPPENS IF THERE ARE COST OVERRUNS? |
| A. |
To protect both the Senior Debt Provider and the Mezzanine fund provider the developer will be required to provide a personal guarantee to cover any cost overruns over and above the developers warranted costs. |
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