Inspired Lending has completed an £822,000 developer exit finance loan for an SPV borrower in Sydenham, South East London. The facility refinanced existing borrowing and released funds for other property projects already underway.
Inspired Lending agreed the 12-month loan at 70% LTV, priced it at 0.89% per month and took a first charge over the security. That comprised the final two flats in a newly built eight-unit scheme, and the borrower had already sold the other six.
Both remaining units are on the market, giving the borrower a route to repayment through their sale. The developer exit finance structure meant equity held in the completed scheme could be released and redeployed elsewhere in the developer’s portfolio. Rather than wait for the final two sales before moving ahead with other projects, the developer refinanced its existing borrowing and accessed the funds earlier.
“Developers can reach the end of a successful scheme with most of the units sold and still have a sizeable amount of capital sitting in the final properties,” said Gavin Diamond, chief executive of Inspired Lending (pictured).
“At that point, the question is not necessarily whether those remaining units will sell, but whether it makes commercial sense to leave that money tied up while they do.
“The final few sales can take time and developers have to think about what comes next in the meantime. If there are other projects already under way, being able to release equity from a completed scheme can give them far more control over how
they deploy their capital rather than making the next stage dependent on the timing of individual property sales.
“That‘s where developer exit finance can be particularly useful. The development has done what it was supposed to do, the bulk of the sales have completed, and there is a clear route to repayment. Finance can then act as the bridge between finishing one project and putting that capital back to work in the next.”
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