Development exit finance

Criteria for a development exit bridge

Development exit lenders are most comfortable once a scheme has reached practical completion, because the construction risk that drove the development loan has been removed. They want sight of the completion certificate, building regulations and warranties, a valuation of the finished asset, and a credible plan to repay: a sales programme with realistic pricing and absorption, a lettings strategy, or a refinance route. They will assess the developer's experience, but they are underwriting a finished, saleable, financeable asset rather than years of trading. A first-time developer is fundable where the scheme is genuinely complete and the exit is sound. They are stricter on the exit than on the borrower, because a development exit bridge with no realistic repayment route simply moves the problem along. We confirm and document the exit before the facility draws, so the bridge does its job and is repaid on time rather than rolled repeatedly.

How much you can borrow and what it costs

Development exit finance is sized against the value of the completed scheme, indicatively up to 70 to 75 percent of value, which is often higher than the development loan being repaid because the asset is now finished and valued on completion rather than on cost. That headroom can release surplus equity for the developer to put into the next scheme. Pricing is lower than the development loan it replaces, because the construction risk is gone, and is set per month or per year depending on the lender and the length of the facility. Interest can be retained, rolled up or serviced, so the net day-one advance is the gross loan less any retained interest and fees. Expect a lender arrangement fee, indicatively around 1 to 2 percent, a valuation, and legal costs for both sides. We model the loan against value, the equity it releases and the all-in cost over the expected term before approaching lenders. All bands are illustrative, vary by lender and scheme, are subject to principal sign-off, and are not an offer.

Fees, rates and the saving against a development loan

The point of development exit finance is the saving: refinancing off a development loan priced for construction risk onto a bridge priced for a finished asset usually cuts the monthly cost materially, while removing the maturity pressure that forces a fire sale. Expect a lender arrangement fee, indicatively around 1 to 2 percent, a valuation fee, legal costs for both sides, and sometimes an exit fee. The largest cost lever is time: a bridge held for three months costs a fraction of one held for eighteen, so a realistic sales or lettings plan and a clean exit matter more than chasing the lowest headline rate. We disclose our broker fee in writing, quote the all-in cost over the expected term, and never claim an exclusive panel or an exclusive tie to any lender. The figures are indicative and not an offer of finance.

Development exit finance against the development loan and stabilisation finance

Development exit finance and stabilisation finance both replace a development loan at practical completion, and the choice turns on what the finished asset does next. Development exit finance suits a scheme that will be sold, classically a residential development where the developer needs time to market and complete on units: it is value-led bridging that holds the asset through the sales period. Stabilisation finance suits a scheme that will be held and let, where the asset needs to reach stabilised income before a term lender will refinance it: it is income-led and sized on the lease-up trajectory. Where a build-to-rent or commercial scheme will let and then be held, the route is often development exit or stabilisation finance, then a long-term investment term loan. We map the route so the asset is on the right debt for what it is about to do.