Developer completion funding

The scenario

A developer is at or near completion on a project. Three common shapes show up: the construction facility is about to expire and the project is not fully sold; the project needs the final tranche of capital to finish; completed stock is sitting unsold while the marketing campaign runs. In each case, short-dated capital bridges the gap to the eventual sale or refinance.

Why the bank cannot solve it

Bank construction facilities are structured around construction; once the project is complete, the bank expects either sale-down or refinance to a standard investment loan. Where neither has happened yet (slower sale market, marketing window extension), the bank channel struggles to extend.

How a private lender approaches the file

The credit team underwrites the sponsor, the completed asset, and the exit. Sponsor track record carries significant weight on completion files; a developer with comparable delivery history and a project tracking to plan is in a much stronger position than one without. The structure is sized against the completed value and the realistic sale or refinance timeline.

Indicative file structure

• Security: registered first mortgage over the completed asset, GSA over the developer entity, personal guarantee from the sponsor.
• Term: sized to the sale or refinance pathway with contingency.
• Drawdown: typically a single advance to pay out construction debt or fund completion; tranche structure available on larger files.
• Exit: sale of completed stock, bank refinance on retained stock, or combination.

What credit will ask for

• Sponsor CV with comparable delivery history.
• Project status: completion certificate or path to it, outstanding works if any.
• Sale evidence: contracts under exchange, marketing report, agent appointments.
• Construction loan statement of position if refinancing existing debt.
• Recent valuation of the completed asset.

Key risks

Sale velocity is the dominant risk. A slower-than- expected sale extends the loan and increases total cost. The credit team underwrites realistic sell-down rates based on the market and builds buffer into the term. Property-secured lending carries the risk of loss of the security on default.

Frequently asked

• What is developer completion funding?
  Short-dated capital for the final stage of a project: completing construction, paying out a construction facility, or holding completed but unsold stock through the sale period. Sometimes called residual-stock finance or completion finance.
• Does this need a strong sponsor track record?
  Yes. The credit team underwrites the sponsor first; the file shape sits on top of that. Files where the sponsor has comparable delivery history and is delivering this project to plan progress furthest. First-time developers in this stage usually need stronger structuring.
• How is completion finance sized?
  Against the completed asset value (or value on completion) and the documented exit. The credit team underwrites both: how much value is in the completed project, and how quickly the exit (sale or refinance) will actually deliver.
• What is the exit?
  Sale of the completed stock at expected prices, refinance to a bank investment loan if the developer intends to hold, or a combined sale-down with bank takeout on retained stock. Each exit is documented and stress-tested at submission.
• Can it pay out an existing construction facility?
  Yes. A common use is taking out an expiring construction loan when the project is complete but stock has not fully sold. The completion facility pays the construction debt, and clears as stock sells or the developer refinances individual lots.