Sell-Down
Sell-Down is the staged sale of individual lots or units in a completed (or near-complete) development. It is the most common exit strategy in Australian development finance — the proceeds from each sale are used to progressively repay the senior debt, then mezzanine, with the developer retaining the profit margin.
Why It Matters
Sell-down is how the money comes back. Lenders assess the sell-down timeline, comparable sales evidence, and market conditions to determine whether the developer can repay the facility within the agreed term. A realistic sell-down plan — supported by pre-sales, agent appraisals, or comparable evidence — is critical to getting development finance approved.
How It Works
- As units or lots reach practical completion, the developer lists them for sale (or settles pre-sales).
- Sale proceeds flow to the lender to reduce the outstanding facility balance.
- Senior debt is repaid first, followed by mezzanine if applicable.
- Once all debt is cleared, the remaining proceeds are the developer's profit.
Common Use Cases
- Primary exit strategy for townhouse developments
- Progressive debt reduction on multi-unit projects
- Pre-sale settlements on off-the-plan projects
- Combined with retain and refinance where some units are held as investment
Related Switchboard Resources
- Townhouse Development Finance
- Exit Strategy
- Retain and Refinance
- Gross Realisation Value (GRV)
- Senior Debt
Do I need pre-sales to get development finance?
Not always — but pre-sales strengthen the application significantly. Some lenders require a minimum level of pre-sales (e.g. 50–100% debt cover) before approving the facility. Others will fund on the basis of a strong GRV valuation without pre-sales.
What happens if sell-down takes longer than expected?
If sell-down extends beyond the loan term, the developer may need to retain and refinance unsold stock into a longer-term facility, or negotiate a loan extension with the lender.
Can I sell some units and keep others?
Yes — a partial sell-down combined with retention is a common strategy. Sell enough to clear the debt, then hold the remaining units as investment properties.