Construction Funding Solutions for Property Development

Construction Funding Solutions

Construction funding is the most exposed point in any property transaction: capital goes out before income comes in, and the asset securing the facility does not yet exist. Klean Capital structures construction funding so that drawdown, build programme and exit are aligned from the first advance.

What is funded

Facilities are arranged for ground-up development, major refurbishment, phased schemes and the conversion of existing commercial stock. Funding can cover land acquisition, construction cost, professional fees, statutory costs, rolled-up interest and contingency. The scope of the facility is set by the development appraisal, not by a standard product sheet.

How the appraisal is tested

Three numbers drive the decision: cost to complete, value on completion, and the certainty of the income or sale that repays the facility. Klean Capital reviews the build contract and its pricing basis, the contractor’s capacity, the programme and its float, planning and permitting status, and the contingency held against cost movement. Where a pre-let or forward sale exists, the covenant behind it is examined as carefully as the building itself.

Structuring the facility

Private equity, debt, mezzanine and PPP funding are combined case-by-case. A senior facility may be stretched with mezzanine to reduce the sponsor’s cash equity; a joint venture basis with the developer may be preferable where the sponsor wants shared risk and shared upside rather than a fixed coupon. Drawdowns are staged against certified progress, with monitoring that protects both sides from cost creep going unnoticed.

Planning the exit before the first drawdown

Construction capital is short-dated by design and must be refinanced or repaid. Klean Capital expects the exit to be defined at credit stage: an investment sale, a term refinance onto an income-producing facility, or a sale and leaseback once the occupier is trading. Where the exit is a long-term hold, Private Placement Investment Grade Bonds placed with institutional investors can provide the take-out at a tenor conventional lending rarely offers.

Technical and clean-technology schemes

Where the build has an engineering component — energy plant, resource recovery or an industrial process housed in the asset — Klean draws on in-house capability. Turn-key EPC (DBC) delivery and feasibility studies are available, which lets construction risk be assessed against real engineering evidence rather than a sponsor’s summary.

What to bring

A development appraisal, the build contract or tender position, planning status, the sponsor’s equity contribution and a dated exit plan. With those in hand, Klean Capital can give an early and honest read on fundability.