Development Exit Finance: A Worked Example of Facility Cost vs a Price Cut

The build is finished. The construction line is not. A handful of units remain, the agent wants another quarter, and the bank that funded the works has a repayment date you cannot move.

You then have two numbers to put on one page. One is the all-in cost of a short facility that lets you sell in order. The other is the discount a buyer will extract to exchange fast enough to repay that bank.

This piece works both numbers twice: once in Singapore dollars, once in sterling. Both files are hypothetical. They exist to show the method, not to report a deal. If the facility path leaves more in the SPV after rolled-up interest and fees, you have a case. If it does not, you take the bid.

The arithmetic at practical completion

Forget slogans. You need four lines on one page.

Gross facility to repay the construction lender. Rolled-up interest for the tenor you actually need, not the tenor you wish for. Fees. Then net proceeds once units sell, set against the price a single buyer pays to meet the bank's date.

Interest on these facilities is usually rolled up, so you are not servicing cash each month. That helps a void scheme. It also means the clock is expensive if sales slip.

If you want the product itself rather than the sums, start with what development exit finance is and how it avoids a distressed sale. This piece stays on the arithmetic.

How we read a finished scheme is set out in how lenders underwrite a development exit. A sales plan without names will not survive that reading.

A bank construction facility is not open-ended. In the UK, as Bank Rate moves, the original lender may decline to extend. In Singapore the same conversation happens when a development facility hits its contracted expiry.

Rikvin Capital is a direct private lender operating in Singapore and the UK. In Singapore we lend to accredited investors and corporates; in the UK our borrowers are typically corporates, property investors and high-net-worth individuals. We are not a bank. We lend against the asset and the exit.

Singapore file: dollars against a construction deadline

Hypothetical, not a promise. A 10-unit completed condominium. Current as-is valuation of the completed units $30,000,000, achievable if sold unit-by-unit over 12 months. Construction facility due: $13,500,000. The only bid that meets the bank's date is $27,000,000.

The 1.0% per month and the 1.5% fee used below are assumed figures for illustration only, picked to keep the arithmetic readable. They are not Rikvin pricing. Swap your own inputs in and the method still works.

The rushed bid is $3,000,000 light. The modelled facility costs $2,025,000. On these inputs the facility leaves about $975,000 more, if the 12-month sales plan holds.

If sales take 18 months, another six months of rolled-up interest (about $900,000) almost erases that gap. What actually prices a file is asset class, void risk and exit clarity; we set that out in how development-exit rates are built.

For completed Singapore residential and commercial stock, the same asset-first approach sits behind our Singapore bridging loan products.

United Kingdom file: sterling on a finished block

Same method, different currency, and again hypothetical. A 14-unit completed new-build. Current as-is valuation of the completed units £16,000,000, achievable over nine months. Construction due: £8,800,000. A bulk buyer will exchange in six weeks at £13,600,000.

The haircut is £2,400,000. The modelled facility costs £1,050,000. The residual is £1,350,000 better on the orderly path, inside a 75% LTV ceiling, on a nine-month tenor.

Slip to month 15 and you add six months of interest. The buffer shrinks fast. This is the job of a UK developer exit bridging loan: take out construction debt on finished security, then sell or refinance inside a short, dated window.

Related: £18.8 million against a landmark West London hotel was a different asset class, but the underwrite was the same: first charge and a defined exit.

When the facility is the wrong tool

It is the wrong tool when the exit is not evidenced. A sales schedule with no names is not an exit. Nor is a refinance that no term lender has looked at.

If a modest discount clears the construction line and you have no pipeline, taking the bid is cleaner than paying carry. It is also the wrong tool when the building is not finished. Development exit finance is for schemes that have reached practical completion.

Remaining works, snagging that blocks occupation, or planning still open all belong in a different conversation. The main risk is simple. You buy time, not a better market.

If demand was never there, interest rolls to the stop date and you face a forced sale anyway, with more accrued cost. A complete file still has to pass how we lend: valuation, title, KYC and source of funds.

A term sheet within 24 hours is process speed, not approval. Drawdown is typically about two weeks. Every figure in this piece is a modelling assumption, and any real facility is subject to valuation and due diligence.