Authored by Robert Grajczyk (Investment Director) and Ellen Mogollón (Investment Manager).
When borrowing from a real estate private credit provider, a strong exit strategy is fundamental. At GCI, we consider every loan in the context of its exit plan and provide practical support to help borrowers achieve their objectives. We work closely with borrowers to ensure there are clear achievable pathways to repayment and successful project delivery, even in changing market conditions.
This article explores the most common exit strategies we encounter, some of the methods we use to assess them, and how we support borrowers to achieve successful outcomes. The best exit strategies and associated contingencies are not only well-structured, they are also well supported by the lender.
Valuation and Due Diligence: The Foundation of a Successful Realisation
Realistic valuations form the cornerstone of effective exit strategies. GCI partners with a trusted panel of experienced valuers and supplements formal valuation reports with real-time market intelligence — including agent feedback, recent transactional evidence, and asset-specific factors.
This approach helps borrowers set achievable targets, based on real market conditions rather than potentially faulty assumptions, ultimately improving the likelihood of a timely and successful project.
Building in Flexibility: Primary and Secondary Exit Strategies
The primary exit strategy is the borrower’s core repayment path — whether through asset sale, construction refinancing, or bank refinance.
However, external factors such as market movements, development delays, or changes in credit appetite can impact even well-structured projects. In this scenario, GCI works with borrowers to assess and identify viable secondary strategies, such as increased debt, equity injections or partial sales, that can be activated if required.
This framework helps provide flexibility to borrowers, with contingency pathways available should conditions shift over the life of the facility.
Common Exit Strategies in Practice
- Asset Sale Strategies
Asset sales remain one of the most common exit pathways, particularly for residual stock loans and land subdivisions.
Presales, where available, help validate pricing and reduce market risk. Where presales are non-existent or limited, GCI works with borrowers to establish realistic, staged sales milestones, supported by sales and marketing strategies that suit the asset type and market conditions.
Case Study: We provided a 12-month refinance facility for a luxury residential project, giving the borrower flexibility by allowing time for a comprehensive sales and marketing campaign to achieve a stronger sales outcome.
- Construction Refinancing
We engage directly with real estate agents and test assumptions around pricing and absorption rates to ensure borrowers are equipped with actionable, market-aligned plans.
For landbank facilities, a typical exit involves transitioning into a construction facility once a Development Application (DA) is in place. GCI places particular emphasis on sponsor experience, builder capability, and the feasibility of the development plan.
We assess the deliverability of the proposed project, benchmarking assumptions against market evidence and third-party estimates. Where needed, we leverage our network of valuers, quantity surveyors, builders, and agents to support borrowers in validating assumptions and strengthening their construction readiness.
Our experience across Australia and New Zealand real estate markets enables us to anticipate and mitigate potential hurdles, giving borrowers a clearer path to construction funding.
Case Study: We provided a 6-month landbank facility to support a borrower in securing DA approval for a 12-townhouse project. Upon planning approval, the facility is expected to be refinanced with construction funding from a bank.
- Bank Refinance for Income-Producing Assets
GCI assists borrowers seeking to transition from a private credit loan into a lower-cost longer-term bank facility once a property has become a stabilised income-producing asset.
Where assets are not yet bankable, we structure interim solutions and work with borrowers to achieve the income, leasing, and operational benchmarks required to move to a major bank. Whether stabilising a newly developed asset or repositioning an existing one, we focus on building a clear and credible pathway to refinance.
Case Study: We assessed a bank-funded portfolio of income-producing assets that had fallen outside the bank’s Interest Coverage Ratio requirements. To support the borrower, GCI proposed a 12-month bridging facility with equity release, enabling asset improvements, rental uplifts, and selective asset sales to reduce leverage and restore the portfolio to bankable status.
Managing Risk: Alternative Exit Pathways
Even well-structured projects can encounter unforeseen challenges. That’s why GCI works proactively with borrowers to embed viable contingency strategies at the outset, helping ensure projects remain on track despite market volatility.
Alternative strategies may include increased debt limits, equity injections, partial sales, or refinancing to alternative lenders. We assess the feasibility of each option based on the borrower’s broader portfolio, liquidity position, and business plan.
This approach allows projects to maintain momentum, protecting borrower outcomes and providing lender support throughout the loan term.
How GCI Partners With Borrowers
Our approach is grounded in partnership, collaboration, and shared success. Throughout the loan lifecycle, GCI works with borrowers to:
- Stress-test exit assumptions at origination
- Monitor key project milestones
- Support adjustments to exit strategies as needed
- Provide market intelligence and access to specialist networks
- Maintain flexibility to adapt to evolving circumstances
We understand that real estate projects require agility and informed decision-making. Our experienced team is committed to providing practical, commercially minded support that helps borrowers deliver on their business plans with confidence.
Speak With the GCI Real Estate Team
If you are considering your next real estate project and would like to discuss structuring an effective exit strategy, please contact the GCI Real Estate team. We welcome the opportunity to work with experienced borrowers and brokers in delivering successful outcomes.