Illustrative Scenario: Barking Residential Development
An illustrative example of how development finance can be structured for a residential conversion project in Barking. A representative scenario, not a completed transaction.
This is an illustrative scenario, not a completed transaction, showing how Construction Capital would typically structure development finance for a residential conversion project in Barking, where average property values are £1050 per square foot.
The Project
An experienced developer approaches us to fund a high-specification residential conversion of a period building in Barking.
Key Numbers
| Metric | Value | |--------|-------| | Location | Barking | | Project Type | Residential Conversion | | GDV | £8,400K | | Build Period | 18 months | | Local Rental Yield | 3.8% | | Planning Approval Rate | 68% |
The Challenge
The developer needs to move quickly — the vendor has set a 6-week exchange deadline. Traditional bank funding would typically take 8-12 weeks, risking the loss of the site. The developer also wants to maximise leverage to preserve capital for a second project in the pipeline.
Our Approach
We would structure a combined senior debt and mezzanine facility:
The key is finding a senior lender comfortable with Barking's market dynamics. The borough's 68% planning approval rate and active pipeline of development sites gives lenders confidence in the local market.
Indicative Timeline
Illustrative Outcome
On a scheme like this, completion on time and within budget at around 18 months is realistic, with units selling within a few months of practical completion at or close to the projected GDV.
A well-structured combined senior and mezzanine facility of this kind can meaningfully improve a developer's return on equity compared with a single, lower-leverage facility.
Lessons for Barking Developers
1. Speed matters — Having a broker with established lender relationships cuts weeks off the process 2. Leverage enhances returns — Combining senior and mezzanine finance can significantly improve return on equity 3. Local knowledge counts — Understanding Barking's planning environment and market values helps secure competitive terms 4. Exit strategy flexibility — With rental yields in Barking around 3.8%, developers have the option to sell or hold
Discuss your Barking project with us — indicative terms within 24 hours.
This is an illustrative example of the type of development finance Construction Capital structures for Barking projects, not a completed transaction. Rates and terms are indicative.
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