Day One Loan to Cost measures the ratio between the senior debt drawn at completion and the total cost of a property development project, expressed as a percentage. In UK property development finance, it is a key senior debt metric used by lenders to assess risk exposure at the outset of a scheme. The formula is: (Day One Loan ÷ Total Development Cost) × 100. This figure can differ significantly from the final Loan to Cost ratio, particularly in phased drawdown facilities. It is used alongside other measures, such as Loan to Value (LTV), to structure funding and ensure the project remains within acceptable leverage limits.
This sits beneath Senior Debt Metrics, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Day One Loan to Value, as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Day One Loan to Cost is most commonly encountered in connection with Bridge-to-Term Loan within the property development capital stack.
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