Developer Exit Finance at 80% LTV

Developer Exit Finance allows developers to refinance expensive development loans once construction is almost complete. By moving onto a lower-cost facility, developers can reduce finance costs and create more time to sell completed units without unnecessary pressure.

In this case study, Positive Commercial Finance arranged Developer Exit Finance at 80% Loan to Value (LTV) for an experienced developer completing two residential developments in South West England.

The Opportunity

Our client was delivering two residential schemes simultaneously using a combination of senior debt and mezzanine finance.

As construction neared completion, the original funding had become increasingly expensive. The developer wanted to refinance onto a more cost-effective facility while marketing the remaining homes for sale.

The Challenge

Although one of the developments was almost complete, three properties still required minor works before reaching Practical Completion.

Many lenders would have based the loan on the site’s current investment value, reducing the amount available and making it difficult to refinance the existing debt.

Instead, the client needed a lender prepared to take a practical, commercial approach and recognise the near-complete status of the development.

Our Solution

Positive Commercial Finance introduced the developer to a specialist lender experienced in Developer Exit Finance.

Following a detailed review of the scheme, both the lender and the valuer agreed that only minimal works remained.

Rather than applying a conservative investment valuation, the lender based the facility on the Open Market Value, while retaining a small portion of the loan until the outstanding works were completed.

This approach increased the available borrowing and enabled the developer to refinance the existing senior and mezzanine funding on more competitive terms.

Deal Structure

• Loan to Value (LTV): 80% (based on Open Market Value)
• Interest Rate: 0.95% per month
• Arrangement Fee: 2%
• Exit Fee: None
• Term: 8 months

The Result

The developer successfully refinanced their existing development finance before completing the final properties.

With a lower-cost facility in place and only minor works remaining, they were able to complete the development and market the remaining homes without the pressure of an expensive development loan.

This case study demonstrates how Developer Exit Finance can help experienced developers reduce borrowing costs, improve cash flow and create additional time to achieve the best possible sales values.