A development exit finance facility amounting to £7.1 million has been arranged for a residential scheme south of Bristol. The structured financing solution was brokered by specialist advisor Mortimer Street Capital, with Recognise Bank providing the loan as lender. The facility serves a property developer seeking to reorganise its existing debt structure prior to the complete sell-out of the units.
The secured portfolio comprises a total of nine units on the development site. Specifically, the facility covers seven completed residential houses as well as two plots currently under construction. By combining completed stock with ongoing construction on the remaining two plots, the financing bridges a transition phase of the overall development.
Strategic release of capital for new schemes
The primary purpose of the facility is to provide liquidity to the developer at an early stage. By refinancing the original development facility, locked-up equity can be released ahead of schedule. This enables the developer to deploy capital immediately into new land acquisitions and upcoming projects, before all homes south of Bristol have been sold.
Exit finance has established itself as an essential tool in the UK residential sector. It allows developers to replace typically higher-interest development facilities with a more cost-effective loan once significant parts of a site are completed. This gives market participants leeway to manage the sales process without operational sales pressure and at appropriate prices.
Key transaction details
- —Financing volume: £7.1 million
- —Lending institution: Recognise Bank
- —Advisory and brokerage: Mortimer Street Capital
- —Portfolio scope: Seven completed houses and two plots under construction
With the successful provision of funds by Recognise Bank, the completion of the two plots still under construction is secured. At the same time, the measure strengthens the company's capacity for forthcoming transactions. Through the deal structured by Mortimer Street Capital, the developer can conclude the scheme south of Bristol in an orderly manner while simultaneously pursuing new acquisitions.
