Development exit deal agreed outside lending criteria

What was the situation?

The client had completed a property development in South West London and required a quick refinance. During the term with his previous lender, he achieved a planning uplift which substantially increased the gross development value (GDV) but also meant the client was unable to complete the construction works required in the original term agreed. The existing lender had approved an extension but further time was needed for the client to be able to sell the development without any pressure of deadlines.

What was the issue?

What started out as a straightforward refinance turned into an extremely challenging deal, very quickly. The existing lender had instructed receivers during the period we were refinancing and already had multiple offers coming in which created two major challenges.

Firstly, the new lender that had issued development exit terms does not typically allow refinances to be accepted if the receivers were already in place.

Secondly, the loan amount required had increased substantially due to the costs for the receivers and the default interest that increased quickly. This pushed the loan to value (LTV) of the property above the lender’s limits of what they would typically accept for development exit deals.

What was the process?

Through our strong long-standing relationship with the lender, we managed to get the support of the Head of Bridging who was able to secure credit approval. Not only did this allow us to proceed with the deal despite the site being marketed through receivers, but we were also able to secure a higher loan amount to cover the existing debt.

What was the solution?

We managed to secure the exit and push the deal through before the potential purchaser managed to exchange. The funding we secured was at a low rate of 0.59% per month. Having a low development exit rate and 12 months to sell the development meant the developer could focus on maximising the profit of the project.

The client was relieved the deal went through and was very satisfied with the service of the LDN Finance support team who ensured his deal had all the attention it required to get it across the line. We are now looking at our next project together and are lined up to move quickly on our second.

Lending solutions with LDN Finance

Are you looking to secure development exit finance for a new or existing project? At LDN Finance, our expert team has a wealth of experience in securing commercial development finance, working closely with our trusted network of private banks and specialist lenders to arrange bespoke funding solutions to suit your circumstances at competitive, market-leading rates.

Get in touch with us today with our brokers today to organise an initial consultation.