The term of the existing facility allowed 15 months for the build, plus then a further six months for sales. While the scheme was delivered in line with the projected programme, on time and budget, some of the sales had dragged through no fault of the developers. 

Sixteen units had sold relatively quickly, leaving five to sell, which essentially would release the profit in the scheme.

The developer was keen to release the equity as he had another site under contract, but didn't have the cash resources to progress matters until his current scheme was brought to fruition. 

We suggested a refinance option on these last five units using a “Developer Exit Bridge” product to give the developer further time to sell at an acceptable price, as opposed to “offloading” them quickly at a discount to investors. 

The incoming bridging lender allowed a 12-month term for sales, and provided 70% loan to value on day one, with interest at 0.75% per month allowed to roll-up (subject to a maximum of 75% gross) with the 2% arrangement fee added. The deal came with no exit fees or redemption penalties. 

Since the refinance, the equity release has enabled the developer to move on to his next project, while taking another two reservation fees on the remaining units at the asking price. 

Development facilities can often come with tight timelines, and while the developer can do everything in their power to ensure the scheme is delivered on time, there is no control over the market or indeed the prospective buyers and their actions. As such, a sales bridge is the perfect tool to ensure a developer exits a scheme under their own control.

Attributed to John Waddicker, Director at Positive Commercial Finance