£2m Development Exit Facility for Refinance and Equity Release

Two experienced developers required a Development Exit facility to repay their existing lender and release equity from a recently completed redevelopment in Brighton.

The property, originally a dated office building purchased for £720,000, was converted into 7 two-bed flats, totalling 6,000 sqft. The works involved repurposing the existing two floors for residential use and constructing two additional storeys, achieving a GDV of £3 million.

Lendhub provided a £2 million facility at 67% LTV, enabling the borrower to refinance, recover some cash used for construction costs, and continue marketing the flats with the flexibility and time needed to achieve their sales.

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Key Challenges and Solutions

Valuation

The valuer applied a 30% discount to the block value, which would normally restrict available leverage. Using our market knowledge and confidence in local demand for individual unit sales, we were comfortable structuring the facility against the aggregate value of the flats. This ensured the borrower achieved the required loan size.

Cash-Out Requirement

Our client needed to release equity to restore funds already invested into the property. Rather than treating this purely as a ‘cash out’, we took a pragmatic approach and structured it as a straightforward refinance. This enabled the borrower to unlock capital at a more competitive rate.

Legals

‍The transaction faced two key legal hurdles. A pre-commencement planning condition had not been formally discharged by the local authority, and checks also revealed that part of the rear land was unregistered. Working closely with solicitors, we arranged indemnity cover in both cases, allowing the deal to proceed without delay and removing potential risks for all parties involved.

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Outcome

Lendhub delivered a £2 million Development Exit facility at 67% LTV over 12 months, allowing the borrower to:

• Repay their development loan in full
• Release equity to recover sunk costs
• Continue marketing the flats without immediate sales pressure

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Takeaway

This case shows how Lendhub can:

• Resolve planning and title issues quickly to keep transactions moving
• Work around valuation constraints to deliver the right level of funding
• Take a commercial approach to structuring deals, ensuring borrowers can achieve their objectives
• Provide certainty of funds, even where multiple challenges arise

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If you have a similar project and would like to discuss how Lendhub can help you, click the link below:

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