A Note Purchase Agreement is a legal contract outlining the terms under which an investor or lender agrees to purchase promissory notes issued by a borrower. In UK property development finance, this agreement allows developers to raise capital by selling debt instruments directly, often as part of mezzanine or structured finance arrangements. It typically includes interest rates, repayment terms, security rights, and investor protections. Note Purchase Agreements are often used where traditional bank lending is unavailable or to enhance capital flexibility across the development capital stack.
In practice, a Note Purchase Agreement is often used to document private debt placements where institutional investors, family offices, or specialist lenders provide funding outside conventional bank facilities. As a form of Contractual Agreement, it establishes the legal framework governing the issuance, transfer, and enforcement of development-related debt obligations. It may be considered alongside a Bond Loan Agreement, particularly where developers are evaluating different methods of raising capital through debt securities. Depending on deal structure, note purchases can also support funding strategies involving Convertible Debt, providing investors with enhanced flexibility while helping developers optimise capital availability across a project lifecycle.
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