Development Exit Finance: Releasing Trapped Profit to Fund Your Next Site

The build is done, practical completion is certified, and the construction lender wants out. You want the residual equity out of the completed scheme so it can sit as the deposit on the next site.

A bank term-out rarely lets you extract that surplus. The senior facility was sized for the build, not for recycling capital. Development exit finance is the tool for that second job: redeem the outgoing lender, then lend against the standing asset so cash can leave the SPV.

The number that matters is not GDV. It is what actually nets to you after redemption, retained interest and sizing on current as-is value rather than GDV.

What comes out at practical completion

Start with the redemption figure. Everything else is residual. A private lender will then size a new first charge against the completed asset. If that advance exceeds what the construction lender is owed, the difference can leave the vehicle as surplus.

That surplus is the point of development exit finance when you are recycling capital. It is not a cheaper way to sit on the scheme. If you only need to replace the build facility and leave equity in, a longer mortgage will usually cost less over a longer holding period.

Work the arithmetic in this order: current as-is value, times LTV (up to 70% in Singapore, up to 75% in the UK). From that, deduct the construction redemption, the fees, and the interest retained for the tenor. What remains is the cash you can actually take out. If that residual is thin, stop. Do not force a draw to fund the next site.

Why current as-is value, not GDV, sets the cap

GDV is a sales-brochure number: it assumes an orderly campaign, full pricing, and time a 3–24 month facility does not have. We size off the scheme's current as-is value instead, with LTV applied to that figure.

That is why day-one cash is almost always lower than the residual in your development appraisal. The ceiling is the LTV on current as-is value, not 70% or 75% of GDV. How Lenders Underwrite a Finished Scheme turns on that distinction, and on whether the sales clock is already running.

In Singapore, banks still apply the TDSR framework to income-based property loans. We lend against the asset and the exit instead. We are a direct private lender operating in Singapore and the UK, working with developers and corporate borrowers. We are not a bank.

How sales velocity and retained interest cut the net advance

Headline LTV is not the same as usable cash. If units are exchanging slowly, we will not assume the rest sell at asking. Unit-release terms then constrain the day-one net advance: stock that is not reserved stays in the security pool, and the surplus you wanted for the next site shrinks.

Retained interest makes the same cut from the other side. Where interest is retained from the facility rather than serviced monthly or rolled up, the net you can extract is the gross advance minus that retention. A longer tenor protects the exit. It also drags more cash into the interest reserve.

On a UK terrace or multi-unit block, that shows up as a smaller day-one figure against developer exit bridging loans. On a Singapore strata or shophouse redevelopment, the same maths applies to shophouse bridging loans once the build lender is out.

Related: the £18.8 million facility we secured against a landmark West London hotel.

When development exit finance is the wrong tool

Use it when practical completion is real, the construction redemption is known, and there is a credible exit inside 3–24 months: committed sales, a refinance path, or a buyer for the whole scheme. The main risk is taking surplus out, then watching sales stall, so you cannot redeem without putting equity back in or cutting price.

Do not use it when the margin is already thin, or when the unsold piece is the ground-floor commercial (the first line we haircut). If there are no committed sales, the exit is hope rather than a plan. In those cases you are not recycling capital. You are borrowing into a shortfall.

Rate conditions change, and so does the cost of carry while a finished scheme sits unsold. The Bank of England Bank Rate is one UK input and does not set our price. Terms remain indicative and subject to valuation and due diligence. If the next site will not wait, the process is built around an indicative term sheet usually within 24 hours and drawdown typically in about two weeks.