Joint venture finance and preferred equity financing are options available to leverage and increase your property development loan potential.
But just what are they, and how do they work?
Preferred Equity and Joint Venture
You get higher levels of leverage at a lower cost than common equity while our funders get a more secured position and higher return for their risk.
Perhaps you have heard of these terms as ‘joint venture funding’, ‘equity joint venture’, ‘joint venture loans’ or ‘preferred equity’. What joint venture finance or preferred equity financing can do is increase your borrowing potential beyond the limitations of traditional construction finance facilities without a second mortgage.
Joint Venture
Joint venture finance incorporates the lender in the capacity of investor as a party to the project. Generally, joint venture funding is a project specific, contractual agreement between parties that shares the risk, expenses, losses and profits of the project.
Often the Joint Venture partner is not only contributing funds to the project, but also development experience, industry contacts and other specific skills required to complete the project.
Preferred Equity
Preferred equity financing is particularly specific. Pref equity finance supports strong and experienced developers with a solid development project to undertake. Preferred equity funding covers both the land and the build, with the pref equity referring to the completed build as a whole.
Preferred equity finance suits larger scale developments with a well-subscribed pre-sale.
Pref equity is useful to protect the developers equity and allows them to have multiple projects on the go, while not degrading the developers ability to invest in other projects simultaneously.
The key thing to remember with preferred equity finance is that the senior debt capital is repaid in advance of the equity.
We can structure finance for your project with an equity or JV investment in the property-owning entity. You get higher levels of leverage at a lower cost than common equity while our funders get a more secured position and higher return for their risk. Talk to us about the best finance solution for your situation. We’re here to help.
Don’t be afraid to chase your dreams; let us find the solution to fund your project so you can make your mark!
Why Choose IBN?
At IBN, we work closely with our panel of Funders, to move quickly on your loan application. We understand that ‘time is money’ and we make the loan process as seamless as possible. Our experienced staff assist you every step of the way with frequent communication on the loan progress.
We present options that others didn’t know existed
We search for solutions and enjoy the challenge of complex loans
We understand the complexities and requirements for a commercial loan application.
We explain our cost-structure from the outset so that you know what to expect.