Case Study | Residual Stock Finance for newly completed townhouses – Beckenham, WA

Case Study | Residual Stock Finance for newly completed townhouses – Beckenham, WA

Residual stock finance for a newly completed townhouse project in Beckenham, WA.

Project Background

Refinance of residual stock, for 7 x newly completed townhouses to help a developer meet their obligations during wildly fluctuating market conditions as a result of Covid-19.

The development comprised 7 boutique single-level residences.

Location of Project

Beckenham W.A.

The Brief

DFP to secure, short term residual stock finance, to refinance all 7 townhouses, and allow for the sell down of 4 of the townhouses, with a minimum overall term of 3 months to provide scope for the developer to continue sell down of their stock.

Key Challenges
  • At the time of application, the titles had not yet been issued and all values were based on “in-one line”.
  • Also, seeking a lender that has flexibility and commercial acumen to work with the client’s brief.
The Results

DFP ascertained appetite from a DFP underwriter to provide a flexible facility where 3 properties were to be held for 12 months (minimum 3 months).

Based on the detailed analysis from DFP and understanding of the transaction, DFP secured support from its underwriter to fund the transaction. The funder undertook a valuation that showed that the W. A. market was still recovering and was under the client’s market expectations. However, they were still confident to proceed, on slightly reduced terms.

The lender, whilst looking at the titles not yet being issued, was still able to get comfortable with lending to the “on completion” value instead of “in-one-line”, which would not have worked for the client. As a result of both DFP working closely with both the client and the lender, the understanding was to proceed forward and shortly after documents were executed and titles were subsequently issued to the benefit of all.

DFP also facilitated a part cash-out facility against the asset held by the clients to provide sufficient funds for the development project.

  • Finance – Secured and terms agreed
  • Loan amount – $1,650,000
  • Term – 12 months

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