Case Study: Developer Exit Finance for a 20-Unit Residential Scheme

Client BackgroundAt Positive Commercial Finance, we pride ourselves on delivering tailored financial solutions to property developers across the UK. Recently, we had the opportunity to assist a seasoned property developer based in the North West of England. The client, an established firm with a strong track record in residential projects, was nearing completion on a ambitious scheme comprising 20 high-quality family homes. The development was funded through a traditional development finance facility, which had supported the construction phase effectively. However, as the project wrapped up, the developer faced the common challenge of managing unsold units while repaying the original lender.The ChallengeWith the build complete and the properties ready for market, the developer had successfully sold 15 of the 20 homes, generating substantial revenue. However, the remaining five units—comprising a mix of three-bedroom and four-bedroom houses—required additional time to secure buyers in a competitive market. The existing development finance agreement imposed strict repayment deadlines, and the high interest rates associated with extending it were not cost-effective. The client needed a flexible, short-term solution to refinance these unsold properties, allowing them to exit the original facility without incurring penalties or rushing sales at discounted prices. Time was of the essence, as delays could impact cash flow and future projects.Our SolutionRecognizing the urgency, our team at Positive Commercial Finance conducted a thorough assessment of the client’s needs and the project’s viability. We recommended a Developer Exit Finance product, a specialized bridging loan designed specifically for scenarios like this. This facility enables developers to refinance completed but unsold units at a lower interest rate than traditional development finance, providing breathing space to market the properties effectively.Working closely with our network of specialist lenders, we secured a bespoke Developer Exit Finance deal for the five remaining houses. The key features included:

• Loan Amount: £1.2 million, covering the refinance of the unsold units based on their open market value.
• Term: 6 months, with the option to extend if needed, giving the developer ample time to achieve optimal sales prices.
• Interest Rate: A competitive 0.75% per month, significantly lower than the original development finance rate.
• Loan-to-Value (LTV): Up to 70%, reflecting the high-quality completion and strong location of the properties.
• Quick Drawdown: Funds were released within 10 working days of application, ensuring a seamless transition from the existing lender.

Our expertise in navigating complex valuations and lender requirements meant the process was smooth and efficient, with minimal disruption to the client’s operations.Results and BenefitsThe Developer Exit Finance facility proved transformative for the client. By refinancing the five houses, they were able to fully repay the original development lender ahead of schedule, avoiding costly extension fees. Over the subsequent months, all five properties were sold at full market value, generating an additional £250,000 in profit compared to a rushed sale scenario. The lower interest costs saved the developer approximately £15,000 during the term.This solution not only preserved the client’s profitability but also strengthened their financial position for upcoming projects. The developer reported high satisfaction with our proactive approach, noting that our in-depth market knowledge and rapid execution were key to the success.ConclusionThis case exemplifies how Developer Exit Finance can bridge the gap between project completion and full sales realization, turning potential challenges into opportunities for growth. At Positive Commercial Finance, we’re committed to supporting developers with innovative funding solutions that align with their goals. If you’re a property developer facing similar exit challenges or exploring finance options for your next scheme, visit www.positivecommercialfinance.co.uk or contact our team today to discuss how we can help.