Glossary definition
Special Purpose Vehicle (SPV)
A limited company set up specifically to hold a single property development project, ring-fencing it from the developer's other business activities and assets. Most lenders require development finance to be drawn down by an SPV to ensure the loan security is not contaminated by other liabilities.
Definition
A limited company set up specifically to hold a single property development project, ring-fencing it from the developer's other business activities and assets. Most lenders require development finance to be drawn down by an SPV to ensure the loan security is not contaminated by other liabilities. SPVs also provide tax planning flexibility and simplify the eventual disposal of the project.
See also
Closely related terms.
Personal Guarantee (PG)
A legally binding commitment from an individual, usually the developer or company director, to personally repay some or all of a loan if the borrowing entity defaults.
Facility Agreement
The legal contract between a borrower and a lender that sets out all terms and conditions of the loan including the facility amount, interest rate, drawdown mechanics, repayment terms, covenants, and events of default.
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.
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
Legal Due Diligence in Development Finance: What Solicitors Check
Legal due diligence is the backbone of every development finance transaction. This guide explains what solicitors investigate, common issues that delay completions, and how to prepare your legal pack.
9 min read readReadGuide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readRead
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