Which item is typically excluded from development financing costs?

Which item is typically excluded from development financing costs?

• A. Acquisition closing costs
• B. Construction costs
• C. Interest during construction
• D. Lender fees

Answer: (A)

Understanding what counts as development financing costs helps: these are the expenses tied to obtaining and carrying project debt. Financing-related items include the costs incurred to secure the loan and fund the construction period, such as interest during construction and lender fees. Acquisition closing costs, by contrast, are the costs to purchase the site or property itself and are not incurred to arrange or service the financing, so they sit with the acquisition or equity costs rather than with financing costs.

Understanding what counts as development financing costs helps: these are the expenses tied to obtaining and carrying project debt. Financing-related items include the costs incurred to secure the loan and fund the construction period, such as interest during construction and lender fees. Acquisition closing costs, by contrast, are the costs to purchase the site or property itself and are not incurred to arrange or service the financing, so they sit with the acquisition or equity costs rather than with financing costs.