Sell, hold or refinance completed stock.

A decision framework for completed unsold stock — weighing an immediate sell-down against a residual stock refinance, retaining and leasing, or a blended exit.

Residual stock finance

The exit decision is made before practical completion.

Residual stock finance covers the completed, unsold lots at the end of a development — apartments, townhouses, land or commercial tenancies that are built, titled and saleable, but not yet settled. It is not a reward for finishing: it is a separate credit decision, on a different asset, against a different covenant set, often with a different lender.

By handover most variables are already fixed. Your construction facility has an expiry date written months ago. Your valuation basis moves to an as-is assessment of finished stock. Holding costs start at handover, and your next site is either under contract or quietly slipping away. The question is not sell or hold — it is which combination survives all four constraints.

Below: the four exits open to a residual stock position, how the facility differs from the construction debt it replaces, and the order in which to test them. Model your position with the residual stock decision tool first.

What this actually means

A residual stock facility is not your construction facility extended.

Developers often ask for more time when what they need is a different product. The two carry different risks, and the differences decide what you can do with finished stock.

01

Purpose and drawdown

Construction debt funds cost to complete, drawn progressively against quantity surveyor certification. A residual stock facility funds a finished asset, usually drawn once to retire that debt and release working capital where the numbers support it.
02

Covenants and term

Progress claims and cost-to-complete tests fall away. In their place: minimum release prices, sell-down expectations, interest servicing or prepayment, and sales reporting. The term is written to that sell-down or refinance plan, not to an investment horizon.
03

Pricing and release

Pricing reflects completed-asset risk and the credibility of the repayment path, assessed case by case. What is negotiable is the structure around it: fees, term, and the release price at which each lot is discharged.
04

Valuation basis

Finished stock is commonly assessed both individually and "in one line" — a bulk, single-buyer basis below the sum of retail prices. Many residual stock arguments are really about which basis applies.
Four paths

Same stock, four exits, one set of numbers.

Each can be the right answer. Which one is arithmetic, not preference, and it moves with the distance between facility expiry and your realistic sell-down rate.

Path one

Immediate sell-down at a discount

Suits a position where expiry is close, holding costs are heavy against margin, or capital is needed for a site that will not wait.
Costs more than the discount itself: discounted sales become the comparable evidence used on the remaining lots, so the first concession can reprice the balance.
Path two

Refinance to hold and sell down

Suits stock genuinely saleable at your target that needs more time than the construction facility allows — where enquiry is real and the constraint is calendar, not demand.
Costs a second set of fees, valuations, legals and continuing interest, which has to be smaller than the discount you would otherwise wear.
Path three

Retain and lease

Suits a developer who wants the asset long term and has rental evidence supporting serviceability.
Costs optionality: a tenanted dwelling can narrow the buyer pool to investors, change the valuation approach and shift your tax position. Get your own tax and legal advice first.
Path four

Blended part-sale, part-hold

Suits most real portfolios. Sell enough to bring debt to a level the retained lots can carry, then hold the balance for an orderly sale.
Costs discipline in the release schedule: unmanaged, the best stock sells first and the facility is left secured against whatever nobody wanted.
The sequence

Work backwards from the binding constraint.

Start not with what rate you might get, but with the facts that decide whether any path above is open at all.

01

Fix the hard date

Read the construction facility again: expiry, any extension option, what triggers it, what it costs, what conditions attach. That date, not practical completion, is your deadline.
02

Establish the valuation basis

Work out what a valuer is likely to say as-is, per lot and in one line, and make sure the instruction asks for what you need. The wrong basis can close a path before you test it.
03

Price the holding, per month

Interest, council rates, strata levies, insurance, land tax, utilities, defect rectification and marketing, converted to a monthly cost per unsold lot. That figure is what a month of patience is worth.
04

Map the settlement profile

Which contracts are unconditional, which carry finance clauses, what deposits are held, where settlement and sunset dates fall. Contracts settling after facility expiry are a structuring problem, cheaper to solve early.
05

Weigh the next site, then model

Equity committed to a site with a due diligence or settlement date may outrank the marginal gain from holding stock, so put a date and a figure on it. Then run the four paths in the residual stock decision tool and take an assembled package to market rather than a request — see development finance advisory.
Evidence pack

What a credit team will want to see.

Residual stock submissions are more often repriced or declined for missing information than for weak fundamentals. This is the material assembled before a file goes anywhere.

01
Construction facility: agreement, expiry, extension terms, balance, discharge and break costs
02
Occupancy permit or final approval, and registration status of the subdivision or strata plan
03
Schedule of lots: titles, areas, aspect, parking, storage and status
04
Executed contracts: deposits, conditions, settlement and sunset dates
05
Sales evidence: enquiry, inspections, offers received, and agent comparables
06
Valuation instructions and any existing report, confirming the bases assessed
07
Rental appraisals where leasing is on the table
08
A month-by-month holding cost schedule, assumptions shown
09
Defects position: liability period, retention held, outstanding items, warranty insurance
10
Borrower and guarantor financials, ATO position, and the entity holding title
Questions we are asked

Residual stock finance, answered plainly.

How is it different from an ordinary investment loan on the same apartments?

Mainly covenants and intent. An investment loan assumes you hold and service from rent; a residual stock facility assumes sales repay the debt, so it carries release pricing, sales reporting and a term matched to that plan. If you intend to hold long term, say so early — it often points to a different lender.

When should I start planning the exit?

Before practical completion, ideally while the construction facility is being negotiated. Options narrow as expiry approaches, because a lender assessing a file with weeks left is pricing urgency as well as asset risk. Planning early is the cheapest thing you can do to your cost of capital.

Will a lender force me to sell at a set price?

Not directly, but minimum release prices work that way: below that figure a lot cannot be discharged. They are negotiated at the outset, so model your sell-down before documentation, not at the first contract. Where a covenant stops matching the evidence, it can sometimes be revisited with the lender — with data, not correspondence.

Does leasing the stock hurt a future sale?

It can. A tenanted dwelling may appeal to investors rather than owner-occupiers, affecting price and time on market, and some lenders treat leased stock differently for valuation and servicing. It may also change your tax position — get your own tax, legal and conveyancing advice first.
Proof of process

How these decisions ran in practice.

Published records of past transactions, showing how the work was done and how positions were argued. Historical examples only — not an indication of terms, timing or outcomes available to anyone else.

Every deal is assessed on its own facts.

Residual stock

Mosman trophy asset

A $12.6M residual stock facility where the rate initially offered was 9.00% per annum. The position was argued directly with the lender's credit and client-partnerships teams and documented at 7.99% for that transaction. What moved was not the asset — it was who the argument was put to, and the evidence behind it.
Read the Mosman case study →
Blended exit

Duplex, Altona North

A duplex delivered five months ahead of program through hands-on progress-claim management. At completion the two dwellings took different paths: one sold at auction, the other refinanced onto a residual stock facility. A part-sale, part-hold exit planned before completion rather than improvised after it.
Read the Altona North case study →
Facility mechanics

Newport, mid-build

$301,364 of cost-to-complete allowance released mid-build after an evidence-based escalation; the lender's default answer had been no. Facility mechanics are negotiable when the evidence is assembled, and the same discipline applies to release pricing on finished stock.
Read the Newport case study →
Next step

Model the four paths, then test them with a lender.

Siare arranges and structures development and commercial property finance. Our principal has assessed credit inside a bank, run a private credit fund, developed property and worked as a broker — so the conversation starts with your constraint set, not a product sheet.

Start with the decision tool. If the numbers point to a facility, bring the evidence pack and we will tell you which paths are genuinely still open.

Open the residual stock decision toolTalk through your position

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General information for business and investment purposes only. Not financial, credit, tax, legal or conveyancing advice, and it does not consider your objectives, situation or needs. Finance is subject to lender assessment, credit approval, valuation and documentation. Case study figures relate to those past transactions only and are not an indication of terms available to you. Obtain your own advice before acting.