Development
Finance for development - principles Paper 8314
The structure of property finance
| Project Finance | Corporate Finance | | Equity | Debt | Equity | Debt | Development finance | Forward funding
Joint venture
Partnership
Lease and leaseback | Bank project finance
Forward sale bridging finance
Mezzanine finance | Developer’s funds
Share issue | Multi-option funding
Convertible loans
Commercial paper
Deep discount bond (DDB) | Investment finance | Forward sale
Forward funding
Sale and leaseback
Finance lease | Mortgage Eurobond issue Securitisation | Share issue
Retained profit | Corporate bond issue |
Project-based development finance: equity
Most lenders require developers to inject a cash stake from their own resources into the projects they are financing.
→ hard for many developers to achieve difficult to raise new equity since their shares have not been popular with the investing public.
1. Joint venture
→ Joint venture which is an agreement btw 2 or more parties to participate in the profits gained from the development of property.
→ Common approach has been to set up a special purpose vehicle (SPV) which takes various forms.
→ may be limited liability companies or a partnerships.
A notable example of a joint venture: established by AMEC, Balfour Beatty, Kumagai Gumi of Hong Kong,
China State Construction Engineering Corporation & Maeda of Japan f or the construction of the new Hong Kong airport on the island of Lantau in the 1990s.
Advantages of Joint venture:
a. Asset sharing is one of the best advantages about joint venture. use additional finance to facilitate the production & growth, operation of projects & products. increase profit margin & increase your revenue potential;
b. provide a chance to companies to gain new capacity and expertise. access to greater resources, including specialized staff, technology and finance;
c. Sharing of risks and
The structure of property finance
| Project Finance | Corporate Finance | | Equity | Debt | Equity | Debt | Development finance | Forward funding
Joint venture
Partnership
Lease and leaseback | Bank project finance
Forward sale bridging finance
Mezzanine finance | Developer’s funds
Share issue | Multi-option funding
Convertible loans
Commercial paper
Deep discount bond (DDB) | Investment finance | Forward sale
Forward funding
Sale and leaseback
Finance lease | Mortgage Eurobond issue Securitisation | Share issue
Retained profit | Corporate bond issue |
Project-based development finance: equity
Most lenders require developers to inject a cash stake from their own resources into the projects they are financing.
→ hard for many developers to achieve difficult to raise new equity since their shares have not been popular with the investing public.
1. Joint venture
→ Joint venture which is an agreement btw 2 or more parties to participate in the profits gained from the development of property.
→ Common approach has been to set up a special purpose vehicle (SPV) which takes various forms.
→ may be limited liability companies or a partnerships.
A notable example of a joint venture: established by AMEC, Balfour Beatty, Kumagai Gumi of Hong Kong,
China State Construction Engineering Corporation & Maeda of Japan f or the construction of the new Hong Kong airport on the island of Lantau in the 1990s.
Advantages of Joint venture:
a. Asset sharing is one of the best advantages about joint venture. use additional finance to facilitate the production & growth, operation of projects & products. increase profit margin & increase your revenue potential;
b. provide a chance to companies to gain new capacity and expertise. access to greater resources, including specialized staff, technology and finance;
c. Sharing of risks and