Definition
The ratio of total borrowed funds to the developer's own equity contribution in a project, expressed either as a ratio or percentage. A project with 75% debt and 25% equity has a debt to equity ratio of 3:1. Higher leverage increases the potential return on equity but also increases risk, and lenders will assess this ratio to ensure the developer has sufficient skin in the game.
See also
Closely related terms.
Capital Stack
The total structure of funding used to finance a development project, arranged by seniority from senior debt at the bottom through mezzanine finance to developer equity at the top.
Equity
The developer's own capital contribution to a project, sitting at the top of the capital stack and bearing the highest risk but also receiving the residual profit.
LTGDV (Loan to Gross Development Value)
A key lending metric in development finance that expresses the total loan amount as a percentage of the gross development value of the completed scheme.
Loan to Cost
A lending metric that expresses the total loan amount as a percentage of the total project costs including land, construction, professional fees, and finance costs.
Further reading
Guides that touch this term.
Guide
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 min read readReadGuide
Can I Get Development Finance With No Track Record?
An eligibility guide for developers without a completed scheme. We explain which lenders will consider you, exactly what they check, and the lower leverage and higher pricing to expect.
5 min read readReadGuide
Mezzanine vs JV Equity: Cost Worked Example on One Scheme
A worked cost comparison of mezzanine finance and joint venture equity on the same development, showing what each costs when the scheme performs, when profit falls short and where the break-even sits.
5 min read readRead
Where it shows up
Finance products using this term.
Service
Development Finance
Senior debt funding for ground-up residential and commercial developments.
From 6.5% p.a. · Up to 65-70% LTGDVReadService
Mezzanine Finance
Stretch your capital stack beyond senior debt to reduce equity requirements.
From 12% p.a. · Up to 85-90% LTGDVReadService
Equity & Joint Ventures
Equity partnerships and JV structures for developers seeking capital partners.
Profit share from 40% · Up to 100% of costsRead
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