Development finance calculator
Estimate the facility on a loan to cost and loan to GDV basis, the equity you need and the profit on cost for an industrial or logistics scheme.
Your estimate
Illustrative only. Not a quote or advice. Not an offer of finance.
How the development finance calculator works
We add land and build to get the total cost, then test two caps. The loan by loan to cost is the total cost multiplied by the loan to cost percentage. The loan by loan to gross development value is the gross development value multiplied by the loan to GDV percentage. The facility is the lower of the two, because a lender will not breach either limit. The equity you need is the total cost minus the facility.
Rolled up interest is approximated as the facility multiplied by the annual rate, multiplied by the term in years, multiplied by 0.6 to reflect an average drawdown rather than the full facility for the whole term. Profit is the gross development value minus the total cost and the rolled up interest. Profit on cost is that profit divided by the total cost plus rolled up interest, shown as a percentage.
LTC versus LTGDV on industrial schemes
Loan to cost controls your equity contribution and loan to gross development value controls the lender's exposure against the finished asset. On a sharply costed logistics scheme with strong end value, loan to cost usually bites first. Where land is expensive relative to the finished value, loan to GDV can become the binding cap. We model both and the drawdown profile when we quote, and you can size the eventual investment loan with our commercial mortgage calculator once the scheme is built and let.
Worked example
With 1 million pounds of land, 2 million pounds of build and a 4.5 million pound gross development value, the total cost is 3 million pounds. At 70 percent loan to cost the loan is 2.1 million pounds, and at 62 percent loan to GDV the loan is 2.79 million pounds, so the facility is 2.1 million pounds and the equity is 900,000 pounds. Rolled up interest at 9 percent over 18 months is roughly 170,000 pounds, leaving a profit near 730,000 pounds and a profit on cost around 23 percent.
Development finance calculator: common questions
How is a development finance facility sized?
Lenders apply two caps. Loan to cost limits the facility to a share of land plus build, often around 70 percent. Loan to gross development value limits it to a share of the finished value, often around 60 to 65 percent. The facility is the lower of the two. Enter your costs and value above to see which cap bites.
What is the difference between LTC and LTGDV?
Loan to cost is measured against the total cost of land and build, so it controls how much equity you put in. Loan to gross development value is measured against the end value, so it controls the lender's exposure if the scheme has to be sold. On an industrial or logistics scheme the lower of the two sets the facility.
Why is the interest only an approximation?
On a development the loan is drawn down in stages as the build progresses, so you do not pay interest on the full facility for the whole term. We approximate rolled up interest using around 60 percent of the full facility cost to reflect an average drawdown. The real figure depends on the drawdown profile, which we model properly when we quote.
Planning an industrial development?
Send us the appraisal and we will come back with a view on the facility and likely terms within one working day.