Crowdstacker will launch Real Estate Development Loans (PDLs).
The projects are offered as mezzanine loans to bridge the gap between the money offered by the bank and the full cost.
PDLs are hedged against the value of the project as a second charge behind the senior lender.
Crowdstacker has previously offered P2P loans and crowdbonds for a number of companies including nightclubs, vehicle leasing, and agricultural financiers, as well as companies that provide development finance, including Clearwell Capital.
This is the first time investors can fund PDLs directly through the platform.
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“We see PDLs as something similar to ‘Property Development Lite’,” said Karteek Patel (pictured), CEO of Crowdstacker.
“The basic principle is to convey all the excitement and interest by presenting specific construction projects where the investor can see the site, the architect’s plans, the interior plans and the vision of the final product. You can also follow the development through to completion. “
The loans will be eligible for Crowdstacker’s Innovative Finance ISA.
However, the platform warned that investors should be aware of the risks.
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“There are certainly some clear advantages for investors, including confidence in the resilience of the project, which has been thoroughly reviewed by the senior lender even before going through the mezzanine lender’s due diligence processes,” said Crowdstacker.
“The disadvantage is that the mezzanine lender is only repaid as a second loan after the senior lender has been repaid.
“To mitigate this, PDLs will only increase development funding to a total of 75 percent of the loan at gross development value, which means that the final expected sales value that will be reached may decrease by as much as 25 percent of its predicted value before the ability.” affects the developer to repay the debt in full. “
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