Comprehensive Construction Financing

Budget planning, cash flow management aligned with sales and construction progress, and ongoing on-site construction monitoring.

A real estate project is a long-term process that may involve challenges that cannot always be anticipated in advance. A financing partner with an in-depth understanding of the industry can prepare for these challenges ahead of time and respond decisively when they arise.

Ruby Finance’s closed construction financing framework provides developers with the full range of financing components required for a project, applying bank-grade underwriting standards and accompanying the project from the opening of the financing framework through to the release of surplus funds upon completion. The structure enables the financing facilities, cash flow management and construction monitoring to operate in coordination, based on a complete and up-to-date view of the project.

Budget Planning and Debt Structure

The financing process begins with an assessment of the project’s key aspects: planning feasibility, ownership and registration status, contractual arrangements with landowners, the construction budget and sales forecast. Based on this assessment, the project’s financing structure is established, including the balance between senior debt and complementary financing components, the amount of developer equity required, and the milestones for drawing funds.

Senior debt forms the primary financing layer of the project and is structured according to the characteristics of the transaction, project costs, pace of progress and required collateral. The debt is secured by a first-ranking mortgage over the project rights and forms the basis of the closed construction financing framework. Where appropriate, complementary financing solutions may be incorporated alongside senior debt to support the transaction structure and the project’s specific requirements.

The budget and financing framework are structured with the understanding that real estate projects do not always progress in a straight line. Delays in obtaining approvals, changes in the pace of sales, cost increases or shifts in market conditions may occur. A properly structured financing framework must therefore not only address the project’s planned requirements, but also take into account potential scenarios along the way and provide an appropriate financial response to changes or unexpected challenges.

Cash Flow Management Aligned with Project Progress

Cash flow in a construction project is not linear. The pace of sales varies throughout the project; construction progress is affected by a range of factors, including the advancement of works, receipt of approvals, the activities of the professional parties involved and site conditions; and the timing of payments received from buyers depends on contract signing dates and contractual payment schedules.

The financing framework is structured so that draw facilities and credit repayment schedules are aligned with the project’s actual progress, while maintaining disciplined financial planning. In combination transactions, additional complexity arises from the structure of the transaction and the consideration provided to landowners, whether through units in the project or a monetary component, and the financing structure is tailored accordingly from the outset.

In urban renewal projects, timelines are also influenced by progress with rights holders and the receipt of required approvals. The financing structure must therefore be adapted to the unique characteristics of each project.

Guarantees, Insurance, and Construction Monitoring

The financing framework includes the financial obligations required by the project: Sale Law insurance policies securing buyers’ funds, performance guarantees for contractors and suppliers, and additional guarantees according to the project’s requirements. These policies and guarantees are provided in cooperation with the insurance companies working with Ruby Finance. The insurance company’s underwriting process takes place following the underwriting of the transaction by Ruby Finance’s credit committees, based on the same in-depth understanding of the project.

The inspector appointed as part of the financing framework visits the project regularly, reviews progress against the project schedule and budget, and approves credit draws in accordance with construction milestones. Inspection reports are submitted on an ongoing basis and serve as a basis for decisions regarding the continued financing of the project.

Beyond the technical review, ongoing monitoring enables the early identification of deviations that may affect cash flow or the delivery schedule, allowing them to be addressed together with the developer at an early stage.