Logistics development finance
Funding for distribution and last-mile logistics schemes across the UK.
Funding logistics development
Logistics is the demand engine behind the wider industrial sector. National and regional distribution hubs near the motorway network, and last-mile fulfilment units close to dense urban populations, are sought after by operators and investors alike. The structural shift to online retail underpins long-term occupier demand, and that demand story drives strong lender and institutional appetite.
We arrange finance for strategic distribution parks, regional hubs and urban last-mile schemes. Connectivity to the strategic road network, power availability and proximity to population centres are the factors that set values and lender confidence. A pre-let to a logistics operator or retailer covenant is the strongest profile, but well-located speculative schemes in tight markets are also fundable.
Scheme types we fund
- Strategic distribution parks
- Regional logistics hubs
- Last-mile urban fulfilment units
- Pre-let and build-to-suit schemes
Indicative terms
- Loan to costUp to 65 to 70% senior
- Loan to GDVUp to 60 to 65%
- Key testsConnectivity, power, covenant, exit
- BoostOperator or retailer pre-let
Indicative only. Terms vary by lender, scheme and borrower and are not an offer of finance.
How we fund a logistics scheme
Logistics development is funded on senior debt against cost and completed value, with leverage set by demand, location and any pre-let. Build-to-suit schemes with an agreement for lease in place support the highest leverage and keenest pricing. For speculative schemes, lenders weigh power availability and connectivity heavily, and an interest reserve often covers the period to letting after practical completion.
Lender appetite for logistics
Appetite is deep and competitive, with banks, debt funds and institutional capital all targeting the sector. Lenders prize connectivity to the strategic road network, secured power, and last-mile proximity to population. A pre-let or build-to-suit agreement with a logistics or retail covenant attracts the strongest terms; even speculative schemes in undersupplied markets find a willing field of lenders.
The exit
The exit is an institutional investment sale or a refinance onto investment debt once let. Demand from funds and REITs for modern logistics assets is strong, so a let scheme exits readily. Development exit finance covers any gap between completion and letting or sale.
Finance structures that suit this sector
- Senior development financeFunds land and build against cost and GDV.
- Stretch senior financeHigher leverage on build-to-suit or pre-let schemes.
- Mezzanine financeReduces equity on large distribution parks.
- JV equityBacks strategic and portfolio logistics plays.
Fund a logistics scheme
A view on fundability within one working day.
What drives logistics scheme value
Logistics value turns on location, building specification and the rent a distribution or last-mile occupier will pay, capitalised at the yields institutional capital pays for the sector. Lenders model GDV from market or build-to-suit rent, weigh connectivity and secured power heavily, and look for a margin robust to a letting void on speculative schemes.
Indicative logistics finance rates and leverage
Senior development finance for logistics is typically sized to 65 to 70 percent of cost and 60 to 65 percent of GDV, priced competitively given deep institutional demand. A build-to-suit agreement with a strong covenant contracts the income and supports stretch senior or mezzanine at keener rates.
Frequently asked questions
What makes a logistics scheme attractive to lenders?
Connectivity to the strategic road network, available power, and proximity to population for last-mile schemes. A pre-let to a logistics or retail covenant is the strongest signal, and institutional exit appetite for the sector remains deep.
Is last-mile logistics funded differently from big-box?
The tests are similar but last-mile turns more on urban proximity and the scarcity of suitable urban land, while big-box turns on motorway connectivity and scale. Both attract strong appetite in the right location.
Does securing power affect logistics funding?
Increasingly, yes. Grid power and connection timelines have become a real constraint on larger schemes, and lenders will want comfort that the necessary power is secured or deliverable before funding the build.
Can a build-to-suit logistics scheme be highly geared?
Yes. An agreement for lease with a strong covenant contracts the income and de-risks the exit, which supports stretch senior or mezzanine leverage and keener pricing than a speculative scheme.
Funding a logistics scheme?
Tell us about your development and we will come back with a view on fundability and likely terms.