Mortimer Street Capital has arranged £7.1 million in development exit finance with Recognise Bank for a residential scheme south of Bristol, enabling the developer to release capital for new acquisitions before completing all sales.
The facility covers seven completed homes, four of which are sold subject to contract, and two additional plots at damp-proof course stage. The finance redeemed the developer’s existing development facility, allowing the borrower to proceed with further projects without waiting for the remaining sales to complete.
Loan structure and technology features
The transaction was structured at 80% loan-to-value. The properties incorporate smart home technology and are covered by a Zero Bills guarantee for ten years through the Octopus Energy Zero Bills initiative, which provides purchasers with fixed energy costs for a decade from completion.
Justin Trowse, managing director of Mortimer Street Capital, said: “Orchestrating funding for a mid-sized developer is a moving feast. Sales positions shift, programmes move, and the next site rarely waits. The harder part is getting a deal done and finding a partner who understands the sponsor’s requirement and can keep pace with it.”
Heather Mitchell, business development manager at Recognise Bank, noted: “Every development has its own circumstances, and it is important that lenders are prepared to assess each case on its individual merits. This transaction demonstrates how taking a practical, considered approach can help us support developers whose funding requirements may not fit neatly within standard lending criteria.”
Market context
The transaction reflects ongoing challenges in the development finance market, where developers require flexible funding solutions to manage cashflow between projects. Similar flexibility in financing has become increasingly important across the residential sector, as evidenced by recent adjustments to first-time buyer schemes aimed at improving market accessibility.
Trowse led the transaction for Mortimer Street Capital, whilst Mitchell acted for Recognise Bank. Numan Sultan handled the legal aspects for the bank. The deal illustrates how specialist lenders are adapting their criteria to accommodate developers working on partially sold schemes, a common scenario in the current market where sales timelines can extend beyond original projections.
