Introduction
In a build-to-suit and sell model, a developer constructs a customized facility tailored to a specific buyer’s needs and transfers ownership upon completion. While the focus is primarily on project delivery and meeting the client’s operational requirements, it is equally important for the developer to have a well-defined exit strategy. An exit strategy outlines how and when the developer will disengage from the project financially and legally, ensuring profitable closure while reducing risk and liability. A successful exit strategy also influences funding decisions, investor confidence, tax planning, and reinvestment potential. By identifying the right time, method, and conditions for exit, developers can optimize their returns and preserve long-term business sustainability.
Finalize the Sale Agreement Early
One of the first steps in building an exit strategy is to formalize the sale agreement as early as possible. The agreement should include the total consideration amount, payment structure, timelines, and transfer terms. Developers must also clarify responsibilities for legal documentation, tax liabilities, and registration procedures. Early finalization of the sale agreement reduces the risk of price disputes, timeline extensions, or post-construction delays. It also provides a legal framework that governs how and when the exit occurs, allowing the developer to plan for fund allocation, debt repayment, and reinvestment. Early commitments ensure smoother closure of the deal and reduce uncertainty at the handover stage.
Define Payment and Collection Milestones
A build-to-suit and sell exit strategy must include a clear collection plan, outlining how the buyer will release payments throughout the construction lifecycle. Common models include milestone-based payments, such as upon completion of the foundation, superstructure, or finishing. Developers may also negotiate advance payments or a final lump sum at possession. By tying payment releases to measurable progress, developers can manage cash flow, reduce funding gaps, and minimize financial risk. Timely collection also ensures that the developer can exit cleanly without pending dues or delayed disbursements. This structured payment schedule protects the developer’s interests and facilitates smooth project closure.
Secure Legal and Regulatory Clearances
Before executing an exit, developers must obtain all necessary legal and regulatory approvals to validate the property’s status. This includes the occupancy certificate, completion certificate, fire safety clearance, environmental approvals, and utility connections. All documents must be handed over to the buyer at the time of sale. Developers should ensure that the property has no pending encumbrances, disputes, or government dues. Clean documentation not only supports a smooth transfer of ownership but also protects the developer from future legal claims. Ensuring all statutory conditions are fulfilled is an essential prerequisite for a clean and conflict-free exit.
Issue Possession and Completion Certificates
A formal possession process is key to concluding the build-to-suit and sell transaction. Developers must conduct a joint inspection with the buyer and address any outstanding issues listed in a snag report. Upon completion of all items, a possession certificate is issued along with keys, access passes, and legal documentation. This process marks the official end of the developer’s operational role. A detailed completion report should be shared, listing the scope of delivered work, warranties, and as-built drawings. A signed acknowledgment from the buyer provides legal closure and confirms that the facility has been delivered in line with contractual expectations.
Manage Taxation and Capital Gains Planning
The sale of a build-to-suit property triggers tax implications that must be addressed as part of the exit strategy. Developers should plan for capital gains tax, Goods and Services Tax (GST), and stamp duty considerations well in advance. Proper documentation of costs, timelines, and sale proceeds helps in accurate tax computation. Developers may also explore tax optimization through capital reinvestment under applicable tax laws. Planning for taxes avoids financial shocks at the point of sale and ensures compliance with authorities. A sound tax strategy also improves profitability and aids in managing investor relations.
Settle Project Liabilities and Financial Closure
Developers must close all outstanding project-related liabilities before exiting. This includes settling contractor dues, paying vendor bills, and closing construction loans or credit facilities. A financial audit may be conducted to reconcile all project expenditures and recoverables. Once all liabilities are cleared, the developer prepares a final project financial statement. This closure gives a transparent view of profits, returns, and funds available for reinvestment. Ensuring financial closure is also critical for investor payouts, regulatory filings, and compliance with funding agreements. Developers who complete financial closure efficiently set a strong foundation for future projects.
Release Collateral and Discharge Guarantees
In most BTS projects, the developer provides personal or corporate guarantees to lenders and offers land or future property rights as collateral. Upon successful sale and payment realization, the developer must coordinate with the bank or financial institution to release the collateral and cancel guarantees. This may involve issuing a no-dues certificate, obtaining a mortgage release deed, and removing charges from land records. Releasing these encumbrances restores asset ownership to the buyer and frees up the developer’s capital and credit capacity for new investments. Timely release of collateral is an integral component of a complete and lawful exit.
Document Post-Sale Support Terms
Even after handover, buyers may require limited support for operationalization, system configuration, or minor rectifications. Developers should document post-sale support terms, including the duration of the defect liability period (DLP), response timelines, and contact points. A warranty chart should be shared with the buyer, listing coverage details and validity. Developers may offer optional facility management or connect the buyer to third-party service providers. Clarifying the scope and limits of post-sale support prevents future misunderstandings and ensures smooth facility commissioning. Offering post-sale support also strengthens reputation and opens doors for future collaborations.
Communicate Exit to Stakeholders
Developers must communicate the project’s completion and exit clearly to all stakeholders. This includes informing investors, banks, contractors, suppliers, and service providers that the project has concluded and the facility has been handed over. A final project completion report or newsletter can be shared to showcase achievements and highlight compliance milestones. Investors are provided with returns, performance summaries, and closure documentation. Clear communication ensures transparency, closes pending obligations, and builds trust with partners. It also enhances the developer’s brand image and facilitates smoother onboarding for the next project.
Prepare for Reinvestment and Capital Deployment
A forward-looking exit strategy includes planning for how the proceeds from the build-to-suit sale will be redeployed. Developers can use profits to acquire new land, repay debt, or invest in new BTS projects. A reinvestment plan may also consider diversification into different asset classes or geographic regions. Reinvestment decisions should be informed by market analysis, emerging demand sectors, and risk assessments. By planning ahead, developers maintain momentum and ensure that capital does not remain idle. Strategic reinvestment also strengthens business growth and improves investor confidence.
Conclusion
An effective exit strategy in build-to-suit and sell projects goes beyond legal transfer—it encompasses financial closure, compliance, risk release, and future planning. Developers must proactively manage agreements, timelines, clearances, and post-sale obligations to ensure a smooth transition of ownership and the full realization of value. By focusing on structured payment terms, regulatory fulfillment, documentation, and communication, developers not only safeguard their interests but also build long-term credibility. A thoughtful exit strategy reinforces the professionalism of the entire development cycle and enables continuous growth in the competitive world of real estate development.
