A property developer project is a chain of intermediate services: land, planning, construction costs – while the proceeds flow only with the sale. Alternate Capital structures property development finance that carry this chain: bank-side, with mezzanine supplement or as a whole loan, from €750,000 to €180 million.
A property development finance is not a single credit line, but a system of matched tranches: Purchase of land is often financed first – partly through a Bridge financeUntil building rights and calculations stand. Then follows the Construction cost linewhich evaluates according to construction progress, flanked by Avalen for contract fulfillment and warranty.
Repayment is fed by the Buyer rates according to MaBV and the sale. This is where the quality of the structure is decided: Payment plans, release logic and collateral releases must be clocked in such a way that liquidity is sufficient in every construction phase – even if sales are slower than planned.
The Ordinance on Realtors and Builders regulates when buyers are allowed to pay – and thus defines the liquidity rhythm of your project.
According to § 3 MaBV, buyer rates only flow if, among other things, the injunction reservation is entered, the building permit is issued and the load exemption is secured. The rates themselves follow the construction status – from 30 % after the start of the earthworks (at condominiums including the land share) over shell construction, expansion and completion rates up to the final installment after complete completion.
For financing, this means: The bank must Declarations of exemption In order to allow buyer rates to flow; at the same time, she wants to see that every construction phase is fully financed even without an optimistic sales process. We model this logic in the number system – installment plan, releases, collateral removal – before the first lenders sees the documents. This prevents the typical query loops, which otherwise delay property development finance by weeks.
Practice tip: The most common reason for rejection is not the project, but a set of figures that leaves questions open. One week of preparation often saves two months of testing.
Growth at property developers rarely fails due to project access – but rather to tied own funds. Two structures create leeway.
The bank finances 60–75 % of the costs, a subordinate tranche takes over another 10–25 %. Your real own funds fall to 5–15 % – enough to start a second project in parallel. Calculating examples shows the page mezzanine capital for property developers.
An integrated tranche up to about 85–90 % of the cost of a lender: faster in the examination, without subordination coordination – often the better choice on a tight schedule. Details under Whole loans.
Why the choice of financing partner decides on margin and feasibility – and which structures property developers now use: explained in a compact video. Suitable podcast episodes can be found in Podcast hub.
Original recording in German.
Yes, with alternative lenders structures with a lower or no pre-sale quota are possible – against higher financing cost and with a more conservative leverage. Whether this pays off, shows the project calculation.
Yes – as a bridge to building rights or as part of the overall structure. Pure land banking financing without a development perspective, on the other hand, is difficult to present.
The property developers sells to end customers according to MaBV, the developer often en bloc to investors (forward deal). This changes the return logic, collateral and availability – we structure both variants.
Bank-side realistically six to twelve weeks from complete documents; whole-loan structures are often faster. The biggest time leverage lies in the quality of the numbers.
A property development finance rarely fails because of the concept – but because of avoidable detail errors in calculation and structure. If you know these pitfalls, prepare your request from the outset in such a way that lenders gain trust instead of asking questions.
Firstly, there are too few cost buffers. Increases in construction costs and supplements are the rule, not the exception. A calculation without a realistic buffer for the unforeseen signals inexperience and almost always leads to re-demands in the middle of the construction phase – the most dangerous moment for liquidity. Second: overly optimistic sales assumptions. If you set the sales speed and the achievable prices too high, builds the entire repayment on sand. lenders calculate conservatively – and reward realistic assumptions with better conditions.
Thirdly, underestimated MaBV mechanics. The installment release after construction progress and the load release must be precisely interlinked with the payment plan of the financing. Mistakes here lead to liquidity gaps precisely when craftsmen have to be paid. Fourth, the lack of an exit alternative. What happens if unit sales are delayed? Without an alternative, such as initially letting completed units and holding them through investment property finance, slow sales can threaten the project. We structure development finance to address all four factors from the outset, helping improve the prospects of approval.
Land, construction costs, sales proceeds, own funds: Provide the key data – we structure the financing that really supports your project.
Jürgen Kronawitter specialises in structured real estate finance. He helps property investors, developers and portfolio owners implement complex financing solutions. His work focuses on structuring and arranging senior loans, whole loans, mezzanine capital and bridge loans, as well as tailored financing for acquisitions, investment properties, developments and refinancing. By combining conventional bank lending with alternative capital sources, he develops financing structures for domestic and international property projects.
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