£2,600,000 Development Exit Bridge
For developers, the ability to free up liquidity as fast as possible is often a priority. One of the best ways to do this is using a Development Exit Loan. Sometimes delays on site can push developers very close to the end of their facility term, which is also where a development exit loan comes in to great use.
Development Exit Loans generally allow developers to pay off their existing development finance facility and free up some capital to secure their next development site.
Lending Advice for Developers
The Mesa Financial team is experienced at helping property developers to find the right funding solutions for property developments, including Development Exit Loans.
In this particular situation, there had been huge delays due to issues with labour and getting access to material. The developer faced problems getting material onsite through lockdown, then as the world opened the cost of labour increased at least 10%. This put a huge dent in the original appraisal.
The main issue for the Mesa Financial specialist to solve was to allow our client some more time, due to the original development finance term coming to an end. Also given the hot market, extra time would allow our clients to get the absolute best possible price for the new homes they had just built.
How the Development Exit Loan works
Our solution was to restructure the whole facility on to a development exit loan. We were even able to get the funds released before practical completion and building regulations were signed off. The Development Exit Loan paid off the existing development finance facility and released extra cash. This is how it looked on paper:
3 Properties in North West London
Valuation – £3,700,000
Development Exit Loan – £2,600,000 (70% of the Valuation)
Exit – Sale
This solution allowed our property developer client to:
- Release an extra £300,000 in cash
- Pay off existing, more expensive facility
- Commit to future property development deals
- Give our client another year allowing them to maximise their sale price
Lending for Property Developers
Do you need advice on how best to fund development projects? Are you looking for land opportunities for future development sites? Our specialists have years of experience and a growing network of landowners and specialist lenders. Get in touch to find out about future opportunities and to discuss your funding requirements. We would love to work with you.