What is development exit finance in Spain?
Development exit finance is short-term lending that refinances a completed or near-complete Spanish scheme onto cheaper debt, typically up to 70% of value. It repays the development lender, extends the sales window and releases developer equity ahead of the next project.
- Pricing is usually well below the original development facility.
- Terms run six to eighteen months while units are sold.
- Practical completion or near-completion is normally required.
- Exit is unit sales, a bulk sale or an investment refinance.
Key takeaways
- Exit finance replaces expiring development debt with a lower-cost, longer-tenor facility.
- Typical LTVs of 65–75% against gross development value on completed schemes.
- Reduces monthly interest cost meaningfully vs live development debt.
- Available before practical completion — from around 90% construction complete.
- Ideal where the sponsor wants to control sales pace rather than discount to hit a hard exit date.
What is development exit finance?
Development exit finance is a short-term facility (typically 12–24 months) that repays incumbent development debt on a completed or near-completed Spanish scheme. Because the construction risk has largely gone, pricing is materially lower than active development debt — often 200–400 bps cheaper — and terms are more flexible.
It is a common tool for developers who want to sell units in an orderly market rather than discount aggressively to meet a hard senior facility maturity.
When exit finance is the right tool
- The development facility is approaching final maturity and unit sales are behind plan.
- The sponsor wants to release equity from the scheme ahead of unit sales.
- Practical completion is imminent and the incumbent lender will not extend at pricing that reflects the reduced risk.
- A block sale is being explored but is unlikely to close within the current facility term.
Typical structure and pricing
- Facility size: €1m – €25m+.
- LTV: up to 65–75% of gross development value.
- Term: 12–24 months, extendable.
- Interest: serviced monthly or partially retained.
- Release mechanism: partial release charges as individual units are sold, with agreed release prices per unit.
- Fees: arrangement 1–1.5%, exit typically 0.5–1%.
The process and timeline
Well-prepared exit refinance transactions close in 4–8 weeks. Lenders will need:
- Full valuation on both aggregate and single-unit-sale basis.
- QS certificate of practical completion (or near-completion sign-off).
- Licence of first occupation (licencia de primera ocupación) or a clear timeline.
- Sales strategy, evidence of enquiries and any reservations in place.
- Existing lender redemption statement and any snagging schedule.
Releasing developer equity
Because pricing has fallen and the underlying value is proven at completion, exit finance can often be sized above the redemption of the incumbent facility — releasing equity back to the developer to deploy on the next scheme while the completed units continue to sell.
Lenders will want to see a credible sales plan and typically require any equity release to sit within a conservative gearing envelope (usually 65% LTGDV or below).
Case study: €3m bridge secured against Spanish residential
€3m villa capital raise, Ibiza
€3m · 60% LTV · 12-month bridge
Long-standing clients needed €3m quickly to complete significant development works on their London property. Existing mortgages on the London asset ruled out further UK borrowing, and they'd identified their Ibiza residence as the only remaining security. The lending pool for bridging against overseas property is very limited, and other brokers had been unable to place the case.
Through our specialist partners, two private lenders known to lend against Spanish residential assets were approached, indicative terms were obtained quickly and the case progressed with the preferred funder. The clients moved ownership of the Ibiza property into a limited company ahead of drawdown to make interest more tax-efficient, and we coordinated with their solicitor to complete on schedule.
- €3m facility at 60% LTV over a 12-month term.
- First charge taken against a high-value Ibiza residential asset.
- Placed with a private lender after other brokers could not fund the case.
- Clear planned exit — sale of the Ibiza property within the bridge term.
Frequently asked
Questions from readers
How does exit finance differ from a bridge?
Exit finance is a specific form of bridge tailored to completed or near-completed developments. It is priced against a proven asset with sales evidence, so tends to be materially cheaper than a general-purpose bridge and includes a partial-release mechanism as units sell.
Can exit finance be arranged before practical completion?
Yes. Most lenders will consider facilities from around 90% construction complete, provided there is a clear timeline to first occupation licence and no material outstanding building risk.
Will lenders release equity at refinance?
Frequently yes. Where the scheme has completed on budget and the valuation supports it, the new facility can be sized above the redemption of the incumbent — freeing equity for the sponsor's next project.
What happens as individual units sell?
The facility includes an agreed release-price schedule. As each unit sells, the buyer pays the release price to the lender at notary and the charge over that unit is discharged, with any surplus flowing to the developer.
Who provides development exit finance in Spain?
The market is served by specialist Spanish and international debt funds and a small number of banks. Pricing and terms vary widely, so competitive tendering typically produces a material saving.