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
