Portfolio Development Finance: Funding Multiple Projects Simultaneously

Portfolio development finance refers to the practice of funding multiple development projects simultaneously, either through a single umbrella facility from one lender or through multiple standalone facilities from different lenders. As developers gain experience and build a track record, the natural progression is from completing one project at a time to running two, three, or more schemes concurrently. This portfolio approach dramatically increases the developer's annual output, revenue, and profit, but it also introduces additional complexity in terms of capital management, lender relationships, and risk diversification.

The UK development finance market supports portfolio lending in several ways. Some lenders offer multi-project facilities where a single credit agreement covers multiple developments, with shared security and shared covenants across the portfolio. Others prefer to assess each project independently but offer preferential terms to borrowers who bring repeat business. A third model involves the developer working with a specialist broker who coordinates multiple lenders across a portfolio, ensuring that the capital structure of each project is optimised while managing the aggregate exposure across all live schemes.

We work with numerous developers who are running three to eight projects simultaneously, with combined facilities ranging from £5 million to over £50 million. In our experience, the transition from single-project to portfolio development is the most significant scaling challenge a developer faces. It requires not just more capital, but fundamentally different approaches to cash-flow management, risk control, and lender relationship management. This guide covers the key principles and practical considerations for developers looking to make that transition.

Developers pursuing a portfolio approach have two broad structuring options: a multi-project facility from a single lender, or multiple standalone facilities from different lenders. Each approach has distinct advantages and trade-offs that depend on the developer's scale, the characteristics of their projects, and their risk management preferences.

A multi-project facility provides simplicity and potentially lower costs. The developer negotiates one set of terms, pays one set of legal fees, and reports to one lender. Pricing is often more competitive because the lender benefits from the diversification across multiple projects and the deeper relationship with the borrower. On a portfolio of three projects with a combined facility of £8 million, the arrangement fee on a multi-project deal might be 1.25% (£100,000), compared to 1.5-2% on each standalone facility, which could total £120,000 to £160,000 across the portfolio. The saving of £20,000 to £60,000 flows directly to the developer's bottom line.

However, multi-project facilities typically involve cross-collateralisation, where each project in the portfolio provides security for the others. If one project encounters difficulties, the lender can enforce against any project in the portfolio, not just the one that is underperforming. This creates contagion risk: a problem on one site can threaten projects that are otherwise performing well. Standalone facilities from different lenders eliminate this risk. Each lender's security is limited to its specific project, and a problem on Site A has no impact on the lender's ability to recover from Site B. We generally advise developers to use standalone facilities for projects with very different risk profiles, and to consider multi-project facilities for a portfolio of similar, low-risk schemes. For developers exploring development finance for multiple projects, we can model both approaches and recommend the optimal structure.

Cash-flow management is the single most challenging aspect of portfolio development. Each project has its own drawdown schedule, its own cash requirements, and its own revenue timeline. When you are running three or more projects simultaneously, the aggregate cash-flow picture becomes complex, with multiple drawdowns, contractor payments, professional fees, and sales receipts occurring across different projects at different times. A developer who manages each project's cash flow in isolation may find that the portfolio-level position is unsustainable.

The key discipline is consolidated cash-flow forecasting. We recommend that portfolio developers maintain a single, integrated cash-flow model that maps every expected inflow and outflow across all live projects on a weekly or monthly basis. This model should identify periods where aggregate cash demand exceeds available resources, allowing the developer to take corrective action before a shortfall occurs. On a portfolio with combined facilities of £12 million, even a two-week timing gap between a drawdown expectation and the actual funds release can create a temporary shortfall of £200,000 to £500,000 that must be covered from reserves.

One effective strategy is to stagger project timelines so that sales receipts from one project overlap with the equity requirements of the next. If Project A is expected to generate £800,000 in sales proceeds in month 12, and Project B requires £600,000 of equity in month 14, the cash from Project A can be recycled into Project B. This equity recycling approach is the foundation of most successful portfolio development businesses and allows developers to scale without proportionally increasing their total equity pool. However, it relies on accurate timing predictions, which is why we build conservative buffers into every portfolio cash-flow model we prepare. Submit your portfolio plan through our deal room and we will help you optimise the timing and structure.

Cross-collateralisation occurs when the security for a lending facility extends across multiple properties or projects. In a portfolio context, this means that the lender holds charges over all projects in the portfolio, and a default on any one project can trigger enforcement rights across all of them. While cross-collateralisation makes commercial sense for the lender (more security reduces their risk), it creates significant concentration risk for the developer.

The worst-case scenario involves a developer running three projects under a cross-collateralised facility. Project A encounters a planning issue that delays completion by six months. The delay causes a covenant breach under the umbrella facility, which technically gives the lender the right to enforce against all three projects, including Projects B and C which are performing perfectly. While most lenders would act reasonably in this situation and waive the covenant for the performing projects, the developer has no contractual right to demand this. The lender's discretion is absolute, and in a stressed market environment, lenders may take a more conservative approach to enforcement.

To mitigate cross-collateralisation risk, we recommend several strategies. First, use separate SPVs for each project, so that the legal liability for each development is ring-fenced in its own company. Even under a cross-collateralised facility, this structure provides some protection by limiting the contractual recourse to the SPV that owns each project. Second, negotiate carve-outs in the cross-collateralisation provisions that allow individual projects to be released from the portfolio security upon completion and sale. Third, consider whether the cost saving of a multi-project facility genuinely justifies the contagion risk. For projects above £5 million, the additional legal costs of standalone facilities are modest relative to the risk protection they provide.

The transition from running one project at a time to managing a genuine development pipeline requires not just more capital but also more sophisticated operational infrastructure. Developers who successfully scale to four or more concurrent projects typically invest in dedicated project management resources, standardised reporting systems, and relationships with multiple lenders and professional advisors. The developer's role shifts from hands-on project manager to strategic director, overseeing a team that delivers individual schemes while the developer focuses on deal origination, capital allocation, and lender relationship management.

From a finance perspective, scaling requires the developer to build a reputation with multiple lenders. While a single lender can support two or three concurrent projects, concentration risk for both parties becomes uncomfortable beyond this point. We recommend that portfolio developers maintain active relationships with at least three development lenders, rotating deals between them to ensure that no single lender has excessive exposure. This diversification also provides pricing tension: lenders who know they are competing for a developer's next deal are more likely to offer competitive terms.

The financial threshold for scaling varies, but in our experience, developers need a minimum equity pool of £750,000 to £1 million to sustain two concurrent projects, and £1.5 million to £2.5 million for three to four projects. These figures assume mezzanine finance is used to reduce equity requirements per project and that equity is recycled from completing to new projects. Developers with less capital can still pursue a portfolio approach by combining mezzanine debt with equity JV partners, but this increases the complexity and cost of each deal. Our team specialises in structuring portfolio capital strategies and can help you build a sustainable scaling plan based on your available resources and growth objectives.

Running multiple development projects simultaneously introduces portfolio-level risks that do not exist when developing a single scheme. The most significant is correlation risk: the danger that a market downturn or economic shock affects all your projects at the same time. A developer with three live schemes in the same city and the same market segment is highly exposed to local market conditions. If property values in that city decline by 10%, all three projects are impacted, potentially pushing the combined margin below viable levels and threatening the developer's ability to repay multiple facilities.

Diversification is the primary tool for managing correlation risk. Geographic diversification, building in different cities or regions, reduces exposure to local market conditions. Product diversification, combining residential, commercial, and refurbishment projects, reduces exposure to any single property sector. Timeline diversification, staggering projects so they complete and sell at different times, reduces exposure to short-term market fluctuations. We have helped developers construct portfolios that deliberately incorporate these diversification strategies, resulting in more stable overall returns even when individual projects underperform.

Insurance and contingency planning also become more important at portfolio level. Each project should carry its own contingency reserve (5-10% of build costs), and the developer should maintain a portfolio-level cash reserve equivalent to at least one month's aggregate interest across all facilities. On a portfolio with total drawn balances of £8 million at an average rate of 8.5%, one month's interest is approximately £56,700. This reserve ensures that a temporary cash-flow disruption on one project does not cascade across the portfolio. For a comprehensive understanding of how individual project funding works within a portfolio, our guide on how development finance works provides essential context.