The Forward-Funding Leverage Ratio compares the amount of debt in a forward-funding structure to the total committed purchase price from the forward funder. In UK property development finance, forward-funding is often used in pre-let or pre-sold schemes where the funder agrees to acquire the completed asset. This ratio helps assess how much of the committed forward-funding value is financed through borrowing. It is calculated as (Debt Amount ÷ Forward-Funding Price) × 100. Developers, funders, and lenders use it to ensure borrowing levels remain within agreed financial covenants during the construction phase.
This sits beneath Senior Debt Metrics, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Gross Loan to Net Development Value (NDV), as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Forward-Funding Leverage Ratio is most commonly encountered in connection with Bridge-to-Term Loan within the property development capital stack.
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