Stabilisation gap and exit calculator
Model the value uplift from day-one to stabilised income, the take-out term loan that exits the bridge, and whether you release equity or need cash in.
Stabilisation finance exists to carry a completed scheme across the gap between day-one value and stabilised value. This calculator quantifies that gap. Enter the day-one value, the stabilised net operating income, the exit yield, the refinance loan to value and the current loan outstanding, and it returns the stabilised value, the value uplift, the take-out term loan, and the equity released or cash required at refinance. It is the picture a lender wants to see before backing the bridge.
- Day-one value£0
- Take-out term loan£0
- Current loan£0
- Equity released£0
Indicative only. Not financial advice or an offer of finance.
How the stabilisation gap works
- Stabilised value = net operating income ÷ exit yield. The value an investor would pay for the proven, stabilised income.
- Value uplift (the gap) = stabilised value − day-one value. The increase in worth as the scheme leases up.
- Take-out term loan = stabilised value × refinance LTV. The long-term debt the stabilised asset supports.
- Equity released or cash required = take-out term loan − current loan. A positive figure is equity you can release; a negative figure is cash you need to put in to refinance.
The arithmetic explains why stabilisation finance is structured the way it is. The day-one value reflects a scheme that is built but not yet earning at full occupancy, so it supports less debt. As the operator fills the scheme over one or two lettings cycles, the income matures, the value rises toward the stabilised figure, and the asset qualifies for a cheaper, longer investment term loan. The take-out loan repays the bridge or development facility, and if it is larger than the loan outstanding, the surplus is equity released. Our stabilisation finance page sets out the structure, and the refinance page covers the term exit.
Stabilisation gap: common questions
What is the stabilisation gap?
The stabilisation gap is the difference between what an asset is worth on day one, before it has leased up, and what it is worth once it reaches stabilised income. As occupancy and the rent roll build, the income an investor values rises, so the asset is worth more. The gap is the value uplift that stabilisation finance is designed to capture.
How do you value a property on stabilised income?
Capitalise the stabilised net operating income at an exit or net initial yield. Divide the annual net operating income by the yield expressed as a decimal: 600,000 pounds of income at a 5 percent yield gives a stabilised value of 12 million pounds. The lower the yield, the higher the value the same income supports.
How much can you refinance out at stabilisation?
The take-out term loan is the stabilised value multiplied by the refinance loan to value. At a 65 percent refinance LTV on a 12 million pound stabilised value, the term loan is 7.8 million pounds. Whether that releases equity or needs cash in depends on how it compares with the bridge or development loan still outstanding.
Does stabilising release equity or require cash in?
It depends on the numbers. If the take-out term loan is larger than the current loan outstanding, the difference is equity released. If the term loan is smaller, the difference is cash you need to put in to refinance. A scheme that has leased up strongly in a tight market usually releases equity; one that has underperformed may need cash in.
Related calculators and finance
Stabilised value calculator
The yield-capitalisation step behind the stabilised value here, in detail.
Open →Lease-up break-even
Model how long the scheme takes to reach the income that closes the gap.
Open →Stabilisation finance
The facility that carries a completed scheme across the gap to term debt.
Learn more →Planning a stabilisation exit?
Send us the scheme and the lease-up plan and we will model the gap and line up the term exit across our lender panel.