Private lending is often framed around pricing. In practice, the more important question is far simpler: Will the lender be there for the full life of the project? Because where projects typically fail is not at approval, it’s during delivery.
A Real Scenario
We were recently approached to refinance a construction facility that was approximately 60% complete. The existing lender was a well-established mortgage fund. However, due to broader exposure across multiple facilities with the same borrower, they made a decision to step away from the project.
Given that construction was underway, contractors were engaged, and construction continuity was critical, this left the borrower in a difficult position with funding certainty suddenly in question.
Situations like this place immediate pressure on a project, as contractors may slow down work or leave the site altogether, costs can begin to escalate, and delays to the construction programme start to compound. Even well-structured, otherwise strong projects can deteriorate rapidly when continuity of funding is disrupted, highlighting the critical importance of stable and reliable financing throughout the lifecycle of a development.
Looking Beyond the Situation
In this case, the underlying fundamentals of the project remained sound: the product was well-positioned for the market, the builder was capable and already mobilised on site, and the sponsor had a clear and credible pathway to completion. The challenge was not the project itself, but rather the continuity of funding and the execution risk that emerged as a result. This is where many lenders become hesitant, particularly during the construction phase, because the risk profile shifts from being theoretical to something immediate, visible, and highly time sensitive.
What Happens Next – A Practical Approach
The first step is not to restructure pricing, but to re-understand the project as it exists today. This is where a hands-on approach becomes critical. Our Property Services Team (PST) was engaged immediately to review the current construction programme, assess the cost to complete, evaluate builder and contractor continuity, and confirm the remaining risks and dependencies.
This is not a desktop exercise, it requires a clear view of what is actually happening on site and what is needed to bring the project through to completion. In this instance, the builder remained in place, contractors were stable, and the programme could continue with minimal disruption. This continuity is often the defining factor between recovery and further escalation.
Structuring Around Completion – Not Just Settlement
Once the remaining scope of works was clearly understood, the focus shifted to structuring a facility that supported completion rather than simply refinancing the existing position – a critical distinction in mid-project scenarios.
Any facility at this stage must align closely with the remaining construction timeline, enable ongoing drawdowns without friction, and maintain contractor confidence through consistent, reliable funding. In this instance, the project’s proximity to completion allowed for a more tailored approach.
The facility was structured to fund the final stages of construction, transition seamlessly into a residual stock position, and removed the line fee post-construction. This effectively enabled the borrower to move from construction funding into the sell-down phase without the need to refinance again, reducing both execution risk and time pressure.
The Broader Point
This scenario is far from unique; it reflects a broader theme playing out across the current market, where lenders are reassessing their exposure, borrowers are navigating shifting conditions, and projects increasingly require flexibility through the delivery phase. In many cases, the differentiating factor is not the quality of the project itself, but how effectively a lender responds when circumstances evolve.
A More Practical View of Lending
There is a growing recognition that development finance is not solely about structuring at day one, but about managing the lifecycle of a project through to completion. This includes actively managing risk as it evolves, supporting delivery through periods of uncertainty, and maintaining alignment between lender, broker, builder, and borrower throughout the term of the facility.
At TierONE Capital, this approach is reflected in how transactions are assessed and managed, combining credit discipline with practical, delivery-focused oversight that remains responsive to on-the-ground conditions. The ability to refinance and complete construction loans mid-project is not treated as an exception, but as a deliberate and considered part of how TierONE Capital supports brokers and borrowers navigating real-world project delivery challenges.
Final Thought
When assessing funding options, the key consideration extends beyond pricing alone. While rate is often the most visible factor, the more important question is what happens if the project does not proceed exactly to plan. It is in these scenarios, where timelines shift, costs change, or delivery becomes more complex, that the true resilience of a funding structure is tested. Ultimately, it is this ability to respond to change that has a greater influence on the outcome than the initial pricing itself.
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