Construction Funding for Residential Apartments, Brisbane ($13M loan, 90% development costs)
The Client required Development Finance Partners (DFP) to finance the acquisition of the site via company share sale agreement and finance the construction costs associated the development of thirty-eight (38) residential apartments located in Brisbane, Qld.
The Property Development Project’s Key Issues
- Developers had no development experience.
- Acquisition of the site had to be settled via a share sale agreement.
- Developers price list was well below market rates.
- Valuation came in significantly lower than land purchase price.
- Not enough presales at land settlement.
- Client has insufficient equity to finance the development.
- Local apartment market in oversupply.
- Builder was forced to renegotiate construction contract due to cost escalation.
Development Finance Partner’s Scope
DFP were retained to provide advice and recommendations to mitigate issues presented.
The Results DFP Delivered
- DFP raised the required capital to settle the share agreement which effectively settled the Land.
- DFP advised, arranged and settled a construction finance from Retail Bank on favourable terms.
- DFP advised, arranged and settled a mezzanine finance facility.
- DFP assisted with and advised on a reduction to the Builders Construction Cost Escalation based upon unconditional finance offers
- Construction is underway
What the Client Says
I understood the level of value that a good finance partner could add. I found the terms that DFP provided were more favourable than what I could see elsewhere.
We had low equity for the size of deal we where doing. This was my first deal. I had no background or experience in development. I wanted to work with someone who wasn’t tied to a bank. Someone I could bounce ideas off who would know what was right vs just going direct to a bank.
We got the deal done which is the main thing. I got all the money I needed to do the project. The banks were comfortable with everything that was presented. Given it was my first time, it could have gone either way so I was happy. The terms were as agreed. Any hiccups were overcome without too much trouble. I made sure that I wanted to be involved as much as possible, at each step of the way Matt would break things down and explain where they were at and why. I now have the confidence to go ahead and do more deals.
I was pleasantly surprised by the level of advisory that DFP provided. I would recommend DFP to other Developers and already have.
Lachlan Cottee, Developer, Brisbane
For expert advice:
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Sydney NSW 2000
P / 02 8916 6246
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Melbourne VIC 3000
P/ 03 8692 0082
Level 18, 175 Eagle Street
Brisbane QLD 4001
P / 07 3041 4136
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