Development Finance
From Land Acquisition to Construction Completion.
Specialist funding across the full capital stack, on projects from $1.5 million to over $100 million
Development finance is one of the most complex areas of commercial lending. The margin for error is small, the capital requirements are significant, and the difference between a well-structured transaction and a poorly structured one can determine whether a project gets built at all.
Impact Brokers works with residential and mixed-use developers at every stage of the capital journey, from land acquisition and pre-development funding through to senior construction debt and the subordinated capital that fills the gap in between. We work on projects from $1.5 million through to transactions exceeding $100 million, and our lender relationships are built to support that full range.
What Development Finance Covers
Development finance is not a single product. It is a layered capital structure where different lenders occupy different positions, carry different levels of risk, and price accordingly. Understanding where each type of finance sits in that structure is the starting point for any serious funding conversation.
- Land and pre-development loans — fund the acquisition of a site before planning approval, or before it is ready for construction finance. Higher risk, typically from non-bank lenders, private credit or specialist financiers. Exit strategy, site value and sponsor experience are the critical variables.
- Senior construction debt — the primary facility that funds the build, in first mortgage position, drawn progressively against certified QS progress claims. Banks typically lend to 65% of gross realisation value; non-bank and institutional lenders can extend further.
- Mezzanine finance and second mortgages — sit between senior debt and equity, letting a developer stretch the total funding position without diluting ownership. Priced at a premium to reflect the subordinated position and higher risk.
- Residual stock finance — funds the period between practical completion and the settlement of remaining stock, giving developers room to settle presales and manage unsold inventory without being forced into distressed pricing.
How Lenders Assess a Development Transaction
Development finance is assessed differently to income-producing commercial loans. Lenders focus on a specific set of metrics, and understanding these before approaching the market is essential.
- Loan to cost (LTC) — the facility as a percentage of total development cost, including land, construction, professional fees and holding costs. Most senior lenders will go to 70% to 75% LTC.
- Loan to gross realisation value (LTGDV) — the facility as a percentage of the completed project value. Senior lenders typically cap this at 65% to 70%, depending on asset type and location.
- Pre-sales — a key risk mitigant. Many lenders require unconditional pre-sales sufficient to cover 100% of the debt or construction costs before formal approval. Non-bank and private lenders may accept a lower threshold.
- Development margin — the profit built into the project after all costs. Lenders want to see a minimum margin of 15% to 20% on GRV. A thin margin signals vulnerability to cost overruns.
- Sponsor experience — weighted heavily, particularly for larger projects. Multiple completions in the same asset class and at the same scale access better terms and a wider lender market.
- The quantity surveyor report — not optional. Every construction facility draws against certified progress claims, and lenders will not release funds without independent QS sign-off at each drawdown stage.
The Question Every Developer Needs to Answer First
Before a funding strategy can be built, a developer needs to be clear on one thing: are you optimising for return on investment, or are you optimising for leverage? These are not the same objective, and they lead to different capital structures.
A developer focused on ROI will typically use more equity, take less debt, reduce their interest burden, and protect their margin. A developer focused on leverage will use as much debt as the lender will provide, deploy their equity across multiple projects simultaneously, and accept a higher cost of capital in exchange for scale.
Neither approach is wrong. But the funding strategy needs to match the objective. A broker who does not ask this question at the outset will often structure a transaction that technically works but does not serve the developer’s actual goals.
Bridging Finance and Operations
One of the most consistent frustrations we hear from developers is not about funding. It is about information. Cost reports sitting with the quantity surveyor, cashflow forecasts in a separate spreadsheet, construction progress tracked by the site manager, and lender and investor reporting prepared manually each month from sources that rarely align.
When information is fragmented across departments and external service providers, capital decisions get made on incomplete data. That creates risk, slows drawdowns, and puts unnecessary pressure on lender and investor relationships at exactly the moments when those relationships matter most.
We are currently developing a purpose-built platform that consolidates project cashflows, construction reporting, budget versus actual tracking, and capital stack management into a single operating environment. It is designed to give developers, their finance teams, their lenders, and their investors a shared, real-time view of how capital is performing across every active project.
More information on this will be available soon. If you would like to be kept informed as we approach launch, reach out directly.
Capital Strategy Mapping
Your full asset pool
We work through your entire capital position to find where funding can be sourced, layered and sequenced to support the project across its full lifecycle.
Bank and non-bank, layered
We look beyond the senior construction facility to unlock liquidity from existing assets and layer bank and non-bank debt to maximise the total funding position.
Built for slow presales
A well-structured capital strategy anticipates slow presales before they become a crisis, building in buffers and sequencing subordinated debt to keep momentum through to settlement.
Your pipeline, not just this deal
The second project needs to start before the first one settles. We structure the current transaction so you are not left illiquid when the next opportunity arrives.
How We Work on Development Finance
1. Understand the project
We start with the site, planning status, capital position, builder relationship, presales strategy and sponsor track record, and what you are actually trying to achieve.
2. Build the credit story
We work through the feasibility, identify the risks a lender will raise, and address them in the submission before we approach the market, not as a speculative exercise.
3. Manage to settlement
We coordinate solicitors, valuers, quantity surveyors, the builder and the lender's project monitoring team through to settlement. We do not hand things off.
Start the Conversation
Development finance rewards preparation. The earlier a funding strategy is in place, the more options a developer has across the current project and the pipeline behind it. Book a strategy call with Yasmine. Bring your numbers, your site, and your questions. You will leave with a clear view of your capital options and an honest assessment of what is achievable.
What helps for a first conversation (even in draft form): a site overview and planning status, a feasibility model or cost schedule, details of any presales, information on the proposed builder and contract structure, and a summary of your prior development experience. You do not need everything finalised before you speak to us.