Developer exit finance
Developer exit finance
Replacing a development facility on a completed scheme, usually at a materially lower rate and with the sales pressure taken off.
What it is
The facility for the gap between practical completion and the last sale.
Brief: explain that a development loan is priced for build risk, and once the risk is gone the rate no longer reflects it. Exit finance repays the development lender at a lower cost and buys time.
[DRAFT] Explain what triggers it: practical completion or near-completion, a development facility approaching term expiry, and units selling slower than the appraisal assumed.
[DRAFT] Cover the two benefits — a lower monthly cost and released equity — and the discipline of a defined sales period.
[DRAFT] Be honest about the alternative: extending with the incumbent lender, and when that is the better answer.
Use cases
When developers use it.
Brief: anchor each card to a commercial trigger, ideally with a real example from the deal book.
Development facility expiring
[DRAFT] Term expiry approaching with units unsold and the incumbent lender unwilling to extend on acceptable terms.
Sales taking longer than forecast
[DRAFT] A slower market removing the pressure to accept a discounted bulk offer.
Releasing equity for the next site
[DRAFT] Drawing profit out of a finished scheme to fund the deposit on the next one.
Pre-practical completion
[DRAFT] Where snagging remains but the scheme is watertight and lenders will still consider it.
Switching to a part-and-part exit
[DRAFT] Retaining some units for rent while selling the rest.
Refinancing an expensive senior and mezzanine stack
[DRAFT] Collapsing two facilities into one cheaper charge.
Indicative terms
What lenders will typically do.
Brief: confirm rates and LTV bands against live cases.
| Measure | Typical range |
|---|---|
| Monthly interest rate | [DRAFT] 0.55% – 0.85% |
| Maximum LTV (of GDV) | [DRAFT] Up to 75% |
| Term length | [DRAFT] 6 – 18 months |
| Build status required | [DRAFT] PC or close to PC |
| Arrangement fee | [DRAFT] 1% – 2% |
| Sales release mechanism | [DRAFT] Per-unit redemption at agreed percentage |
The saving against your existing facility is the number that matters. Run both side by side.
Go deeper
Read alongside development finance.
[DRAFT] Short paragraph linking exit finance to the original development facility and to the GDV calculator so a developer can model both stages.
Questions
The things people ask first.
Scheme finished and the facility running out of runway?
[DRAFT] One line asking for the GDV, the outstanding facility balance and the sales position to date.
Same working day response.