ian wilson

Acre Lane Capital launches three development exit finance products

Acre Lane Capital has introduced three new development exit finance products to provide a complete offering to suit the varied needs of developers.

The specialist lender’s range allows borrowers to refinance their development loans once the units being built are at damp-proof course (DPC) stage, or more advanced. 

The DPC exit loan was created as a result of the lender increasingly spotting opportunities on projects that were pre-wind and watertight.

Acre Lane’s three development exit loans include: 

  • from DPC — once the units being built are at this level, then a refinance is achievable. Acre Lane has seen a significant amount of interest in this product, driven by failure of certain lenders to be able to honour their drawdown obligations
  • from wind and watertight — once at, or predominantly at, a stage of the units being wind and watertight. Due to Covid-19 delays during this year, the lender has seen many developments which have fallen behind their original build schedules
  • from practical completion — once the units are at this point, many developers are looking for a developer exit loan which gives them the time to sell the properties, and reduce their cost of funding.

Acre Lane’s criteria: 

  • rates from 0.59% per month
  • net amount is 70% of OMV with serviced interest, or 75% of OMV, retained
  • maturity is up to 18 months 
  • can include individual or SPV borrowers
  • maximum loan size of £15m
  • residential security only.

Ian Wilson, CEO at Acre Lane (pictured above), believes the products fill the gap between development finance and bridging loans.

“There are a number of drivers to the growth of developer exit loans,” he said, “if the developer is over budget; has run over from a time perspective; or if the lender has failed on a drawdown, Acre Lane can step in. 

“This would involve refinancing the old loan and writing a new [one] to allow the development to continue to fruition.”

This type of finance gives the developer more time to sell or rent out their properties and refinance onto a term BTL mortgage.

Developers may also wish to raise more money to acquire other sites for future development. 

“Generally, developer exit loans should allow developers to take money out either for their next site, repay expensive mezzanine lenders, or use it in any which way they see fit,” Ian stated.

“If the developer needs more time to sell their properties or put in place a long-term refinance, they may not wish to extend their expensive development finance, plus pay extension fees etc.” 

He claimed that developer exit loans could be a much cheaper alternative.

Leave a comment