The Intermediary – March 2025 - Flipbook - Page 34
SPECIALIST FINANCE
In focus
Exit bridge loans:
Reduce risk,
boost returns
I
n today’s dynamic real estate
market, exit bridge loans
have emerged as a strategic
solution, providing shortterm financing to bridge
the gap between project
completion and final sales or longterm refinancing.
Exit bridge loans can help
developers avoid distressed sales,
improve cashflow, and capitalise
on market timing to secure beer
returns. They also have a role to play
in mitigating financial risk by offering
flexibility when facing sales delays or
refinancing challenges.
As uncertainties persist,
understanding how to leverage this
tool could be key to safeguarding
investments and driving profitability
in today’s property landscape.
Minimising risk
Development exit bridge loans are
short-term financing solutions
designed to cover the gap between the
completion of a project and its sale or
long-term refinancing.
Typically lasting six to 18 months,
these loans help developers sele
outstanding obligations, refinance
construction debt, or hold onto
completed properties until market
conditions improve. Considering the
market dynamics of the past three
years, it’s no surprise that their speed
and flexibility have made exit bridge
loans a key tool for developers seeking
rapid access to capital.
One of the key reasons exit bridge
loans have gained popularity in recent
years is their ability to help developers
mitigate financial risk. There are
three main ways development exit
bridge loans help developers safeguard
their interests.
First, these loans help developers
avoid distressed sales. By providing the
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The Intermediary | March 2025
financial flexibility needed, exit bridge
loans allow borrowers to avoid rushing
into sales at reduced prices, giving
them more time to secure beer offers.
Second, exit bridge loans help
prevent loan defaults. These loans
enable developers to meet repayment
deadlines on construction loans,
protecting their creditworthiness
and ensuring that future projects are
not jeopardised.
Third, exit bridge loans assist
developers in managing cashflow.
They offer valuable breathing room to
cover operational costs while awaiting
sales or securing long-term financing.
Boosting returns
Another key reason exit bridge loans
have become increasingly popular is
that they serve as a strategic tool for
maximising returns.
There are three main ways these
loans help developers enhance their
project profitability.
First, they allow developers to
take advantage of market timing.
By postponing sales until market
conditions improve, developers can
secure higher prices.
Second, exit bridge loans provide
developers with the opportunity
to reinvest their capital. By freeing
up funds from completed projects,
developers can reinvest sooner,
accelerating their growth.
Third, exit bridge loans strengthen
developers’ negotiating power.
Without the urgency to sell quickly,
they can secure beer terms when
negotiating with potential buyers.
Supporting developers
One year on from the launch of our
own development exit bridge product,
at BLEND we have witnessed firsthand the demand and the popularity
of this product.
ROXANA
MOHAMMADIANMOLINA
is CSO at BLEND
These loans help
developers settle
outstanding obligations,
refinance construction
debt, or hold onto
completed properties”
Our exit bridge product, secured
by an institutional funding line to
support property developers, was
launched aer recognising the
challenges property developers have
faced over the past 30 months. Our
goal was to support developers with
completed projects carry them until a
fair price sale is achieved.
In today’s property market, with
ongoing economic uncertainty and
fluctuating market conditions,
exit bridge loans are becoming
an increasingly popular tool for
developers because they offer a
strategic way for developers to manage
risk and maximise returns.
By providing short-term financial
flexibility, they allow developers to
avoid rushed sales, improve cash
flow, and seize market opportunities.
For those looking to safeguard their
investments and drive profitability,
understanding and leveraging exit
bridge loans can be a game-changer.
Going forward, as lending platforms
evolve and access to financing becomes
more streamlined, exit bridge loans
are likely to play an even larger role. ●
