Pivot teams up with LDS for new development product

Pivot has partnered with LDS to launch a new development finance offering with an in-built sales guarantee.

The new product will be available to developers looking to fund housing schemes in England and Wales, ranging from 10-30 units, where the GDV is greater than £3m.

It offers loans between £2m and £5m at up to 90% LTC on terms of up to 18 months.

As part of the product, LDS guarantees to acquire any unsold units on a site, removing all speculative risk and allowing lenders to up their leverage.

The company can also release its 10% cash deposit to developers, unsecured and at zero coupon.

Brokers will also be able to benefit from the combined offering, receiving additional fees from LDS on top of the Pivot procurement fee, and better conversion rates due to the increased leverage and reduced equity contributions for clients.

The new product follows a successful pilot on an £1.85m scheme, in which Pivot and LDS partnered to fund the development of eight new houses in Norfolk. 

The loan — agreed at 65% LTGDV at a rate of 9.5% per annum over an 18-month term — was used to support the purchase of the site in King’s Lynn, as well as fund 100% of the build costs.

With speculative risks removed, Pivot was able to accept an equity contribution of just 8% of total costs from the borrower. 

Alongside the 10% cash deposit from LDS, this has enabled the developer to progress on the site, turning a disused, formerly commercial site into eight new three- and four-bedroom homes.

Mark Roberts, senior relationship director at LDS (pictured above), said: “Only rarely in our market is a scheme developed where there are obvious and clear opportunities for all parties involved. 

“As a development finance expert, Pivot was quick to understand the benefits that our sales guarantees bring to SME housebuilding projects. 

“For our first combined offering, we worked together through the due diligence process with the developer, and successfully delivered a unique solution to support the scheme in Norfolk. 

“We’re confident that we can now harness this joint product to empower even more SME housebuilders by transforming the viability of their sites.”   

Shahil Kotecha, CEO at Pivot, added: “We’re very glad to be able to continue to support the SME housebuilder community, and through our relationship with LDS we now have a powerful combined solution that minimises their equity contribution. 

“With several more deals already in the pipeline with LDS, we are looking forward to more completions imminently.”

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