Helping create a feasible development plan for a successful tender
With significant experience in the residential property industry, our client had identified a unique opportunity to purchase a Brisbane in-fill site from a State Government department under a tender process, whereby an expedited DA approval would be made by the land vendor.
With his background, the client prepared a project feasibility for a residential mixed-use development, however found it difficult to stack up based upon the land price that was expected by the vendor. Given the specifics of the property, the client knew there must be an ideal and feasible solution achievable.
Being time poor and not certain of the best solution, the client sought DFP’s advisory services to provide a complete end-to-end solution, including:
- Assess the highest & best use of the site
- Build a full project feasibility, including all revenues, costs, cash flows and ability to finance with available equity over multiple stages as required
- Complete the Tender to the State Government for the land acquisition
- Drive the planning, design, marketing and construction tendering/contracting process,
- Finance the acquisition and development, with a need for funding beyond standard bank LVRs
- Provide complete development and project management services, including responsibility for successful delivery on time and budget
What was discovered
With experience only in residential property, the client had discounted any potential opportunities for commercial development.
Based upon their significant experience across all sectors, DFP initially believed that a commercial development was most likely the optimal solution, however a thorough assessment was required in order to ascertain this.
A pragmatic approach was then taken:
- DFP appointed a leading national town planning firm, the local director of which had a very strong relationships with the decision makers within the government department selling the land and making the decision on DA. Leveraging this relationship, it was identified that the department’s ideal solution for the local community would include a mix of retail shops and a child care centre. With this knowledge in hand, an initial concept was created by the town planners.
- Using their broad industry experience and knowledge, together with advice of external trusted professionals such as commercial real estate agents, quantity surveyors and valuers, a feasibility study including a multi-staged cash flow was built based upon, achievable market rents, yields and development costs. A solution was thereby identified that would achieve the community goals of the government (and therefore tender decision makers) as well as being highly feasible.
- Having a proof of concept worthy of proceeding, DFP prepared the formal tender to the government on the client’s behalf, including initial concept designs by the client’s architect.
- To ensure an optimal negotiation and contract terms outcome for the client, DFP appointed its trusted property lawyers who had specific experience with a number of similar tender acquisitions from the same government department.
The client was successful in the tender, having now gone to contract to acquire the site, on terms better than were expected including a lower purchase price, extended settlement terms and subject to DA in accordance with the design proposed within the tender.
DFP’s highly experienced Development Director was subsequently appointed to commence the full Development & Project Management services. Within the first few weeks, his appointment has already paid dividends, having identified significant development savings by identifying an “outside the box” solution for car parking, thereby completely removing the need for underground car parking – which will make an already feasible project, super-profitable.
Appointment of the leasing agent is to take place imminently, seeking pre-commitments for a local supermarket, specialty retail shops, a medical centre and gymnasium. A highly-experienced and proven child care centre advisory & management firm will take full responsibility for the setup and operation of that component of the project.
There is a common saying in business, “it’s not what you know, it’s who you know”. At DFP we believe both are equally important. By using the experience, knowledge and capabilities of our internal team members, as well as leveraging our broad industry relationships with trusted professionals, whom we know in turn have these same traits and relationships with the people that matter – whatever the transaction – DFP can deliver outstanding solutions and outcomes to their clients.
Could your next project benefit from some expert development finance? Get in touch.
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