How a first-time developer bypassed the banks and landed his first $13M deal.

Development Finance Partners (DFP) were asked to finance the acquisition of a site via company share sale agreement and finance the construction costs associated the development of 38 residential apartments located in Brisbane, Qld.

The 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.

DFP’s Scope

DFP were retained to provide advice and recommendations to mitigate issues presented.

The Results 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 the retail bank on  favourable terms.
  • DFP advised, arranged and settled a mezzanine finance facility.
  • DFP assisted with and advised on a reduction to the builder’s 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

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