What is a SPV?

• Report rights infringement
• published: 09 Mar 2016
• views: 2591

What is a SPV? http://estatebaron.com.au A SPV stands for Special Purpose Vehicle. When it comes to property development a project usually has a set duration - extending from a few months to a few years. The developer comes with the idea for a project, investors invest in it and then after the completion of the project everyone goes their own way. A Special Purpose Vehicle is a structure setup specially to bring all the people together who are involved into a formal structure. The SPV can be a company or a trust structure – at Estate Baron we normally use a company SPV. The Developer usually becomes the Director of the SPV setup specially for the development and while there is no restrictions on what you name the SPV, we normally name it as the address of the development to make it easy to recognize. While the Developer runs the show, in order to protect the investors we do nominate Directors to the SPV who can step in to take control if the project starts collapsing. All investors take an equity share in the SPV and the land is held in the name for the SPV. Any debt is also taken by the SPV but is guaranteed by the Developer (not investors). We also require that the developer invest some money from his side as well apart from leading the development to ensure he has enough skin in the game. Start or grow your property portfolio using crowdfunding at http://estatebaron.com.au today!