Financing · Forward

Forward funding

The institutional buyer funds the development \u2013 the developer secures the exit before construction begins.

In a forward funding structure the investor acquires the project at an early stage and pays out against construction progress. The developer receives a fixed purchase price and a secured exit; the investor secures a newly built asset at attractive economics.

In a forward purchase the price is agreed up front but paid at completion – the developer keeps the construction financing risk and receives a higher margin in return.

We match developers and institutional buyers, negotiate the purchase agreement, milestone mechanics and guarantees, and coordinate the interim financing where required.

Suitable for

Developments with a clear institutional exit
Residential and logistics schemes
Developers seeking to reduce equity load
Investors looking for new-build product
Projects with a defined letting concept

Key facts

Volume: from € 15m
Structure: funding or purchase
Term: construction period
Payment: against milestones
Security: completion guarantees
Typical assets: residential, logistics, offices

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Benefits

Why this structure works

Secured exit

Sale agreed before construction starts.

Equity relief

Payments during construction reduce the equity requirement.

Price certainty

Purchase price fixed at the outset.

Lower financing cost

Institutional capital instead of expensive junior debt.

Planning certainty

Milestones and cash flows contractually defined.

Repeat business

Successful forward deals typically lead to follow-on mandates.

Process

How we proceed

Step 01
Product positioning
Assessment of asset, location, letting concept and institutional saleability.
Step 02
Investor approach
Discreet approach to funds, insurers and asset managers.
Step 03
Term sheet
Purchase price, milestones, guarantees and quality specification.
Step 04
Contract negotiation
Purchase agreement, construction obligation and warranty framework.
Step 05
Construction & handover
Support through milestone payments, monitoring and handover.

From practice

What actually decides the deal

The buyer funds the build

Under a forward funding the end investor pays in instalments during construction. That replaces much of the development facility and takes pressure off equity. In return he wants a say on build quality and lease standards — you have to be comfortable with that.

Pre-letting is the entry ticket

Without signed leases, or at least advanced negotiations, it gets hard. Institutional buyers work backwards from the yield, not from construction progress.

Build costs and indexation

Two years often pass between signing and completion. Split the material price risk contractually or carry it alone. That clause decides the margin more often than the purchase factor does.

Completion security

Guarantees, completion bonds and penalties are part of the package. We structure them so the buyer is comfortable without tying up the developer's balance sheet.

Questions