Despite their initial complexity, Development Exit loans can be a valuable tool for developers. In recent years the Dev Exit loan has become a more viable option for property developers as rising interest rates and overall UK property market uncertainty have led to slower property sales.

In this ‘Ask the Expert’ session, Michael Minnie, Senior Business Development Manager at LendInvest breaks down what makes up and the benefits of a Dev Exit loan and why LendInvest can offer a compelling option with its competitive solutions to property finance deals.

What is a Development Exit loan?

A Development Exit loan provides developers with breathing space after completing a project. To put it simply, it’s a loan to give the client more time to sell off units on a completed development site. It’s a way to relax the pressure of selling down the units as quickly as possible, which may not come at the best price. They [Dev Exit loans] provide “breathing space.”

These loans are particularly helpful for developers looking to unlock their capital to secure a new project or start works on a new o ne. Developers always have more than one project on the go, so a Dev Exit can release some of the equity to get the new development going before selling off every unit in the other development.

What are the benefits of a Dev Exit loan?

Beyond simply providing time, Development Exit loans serve several key purposes. One important aspect is that a Dev Exit loan maximises the sales value. They don’t have to sell at the first offer, they have more flexibility to sell down units at the best possible price.

Aside from unlocking capital as previously mentioned, a Dev Exit loan can also reduce a developer’s overall borrowing costs as in most cases Development finance can be more expensive than the Dev Exit.

A Dev Exit can also improve cash flow for the developer, if the loan-to-value (LTV) reaches a certain level, we can consider the developer retaining net sale proceeds, giving them greater financial flexibility.

Dev Exit loans are useful to ensure that you redeem your development loan on time prior encountering any extension or late fees. It also means you can maintain a strong relationship with that lender for future projects.

Why choose LendInvest for a Development Exit loan?

A Development Exit loan with LendInvest stands out for several reasons. Firstly, we can offer loans up to 75% LTV of the open market value, not the lower 180-day value. Also, we use the breakup value, meaning that the valuation comes from the individual properties rather than the entire block. 

We roll the interest off of the net loan rather than the gross loan, which effectively gives the client not only a higher day one but also a more competitive facility compared to a retained loan which some of our competitors offer.

Finally, a Dev Exit loan with LendInvest means that brokers and developers will have access to our team of specialised underwriters. Whatever the issue, myself or one of LendInvest’s other terrific Bridging Business Development Managers will be able to provide the support to make sure that the most complex of property deals end up as simple as possible.