Bridging Trends: ‘Bridge to Market’
Andrew Hosford, Head of Voltaire Bridging Voltaire Financial LLP
There are a number of reasons that property developers need or want to increase the length of their development facility.
Cost overruns, planning enhancements or revised internal layouts and long periods of bad weather to name just a few. Though these factors are clearly not always developer faults and certainly not all negative issues, development lenders are often reluctant to extend their loans regardless.
As the developments are either completed or approaching practical completion at this point in the process the risk for a new incoming short term lender is reduced. Partly as a consequence of this reduced risk they are typically able to offer pricing that is cheaper than the incumbent development funding.
Some key benefits of carrying out this refinance - often labelled ‘bridge to market’ - can include:
• Reduce the total cost of finance for the remaining period that it is needed
• Complete the scheme without rushing
• Allow the client to sell the properties for the right price rather than being forced to sell quickly to repay the development lender
• Release equity for a variety of uses
More often than not the developer will have (pre) sold a number of apartments in the scheme by the time the refinance is carried out.
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