Fast funding for land bank development in Western Sydney (finance offer within 4 days)

Fast funding for land bank development in Western Sydney (finance offer within 4 days)

How Development Finance Partner helped solve an urgent need for finance for a land bank project in western sydney.  Finance offers were made within 4 days of being engaged by the client.

Background /Issues

• Development Finance Partner’s client purchased an englobo site in Western Sydney under option and lodged a DA for 37 residential lots.
• The DA was issued however, the Client was under enormous pressure to settle in a tight time frame before the expiry of the contract
• The Client was short of equity however had been able to pre sell the majority of the lots given the strong demand for lots in Western Sydney
• The Client required urgent funds to settle the land and then in-principle approval for preferential equity to support subsequent construction funding to complete the subdivision

Scope

• Development Finance Partner was engaged to provide a funding solution to both acquire the site and secure in-principle approval for preferential equity to underpin a senior debt civil works facility.  Given the tight time lines a funding approval was urgently required.

Results

• Development Finance Partner was able to provide an Indicative Approval (subject to provision of pre- sale contracts) within four days of the Credit Submission being completed.
• The Offer of Finance was in two tranches.  Tranche 1 was the first mortgage Land Bank facility at 73% loan to value ratio (LVR).  Tranche 2 was the conversion of the Land Bank first mortgage to a reduced subordinated preferential equity facility to 83% of Total Development Cost in the construction phase.
• With this subordinated underpin, Development Finance Partner will now seek to secure a senior debt construction facility with conservative lending ratios at 71% TDC and 58% NRV.  The pre-sales provide 100% debt cover net.
• This solution has enabled the Client to secure the site and to have the peace of mind that the equity underpin will facilitate a senior debt facility.
• The return on equity to the Client is still attractive at 124% net and the Land bank facility settled within three weeks of the Credit Submission.

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