How an ‘impossible’ equity arrangement unlocked a pipeline of 14 projects.

Steller Group are a Melbourne based property developer. They were seeking an equity partner to provide capital across a pipeline of 14 projects versus providing private funding for projects on an individual basis. They contacted Development Finance Partners.

Steller wanted the flexibility to apply funds across its entire portfolio of existing and planned developments instead of the more usual arrangement where funds are secured against a specific project.

DFP’s Scope

  • To provide advice and structure to facilitate corporate equity
  • The facility was not to be mortgaged back against any particular development.
  • To leverage the dormant and unvalued equity sitting within the Steller Group’s  pipeline
  • The equity could be used to, deposit identified future sites without DA, senior  finance and or pre sales
  • The equity could be recycled continually and did not need to be repaid as  developments completed.

The Results Delivered

  • DFP provided the client advice that would allow the client to borrow the desired  equity.
  • The $70 million facility was advanced utilising the Groups dormant and unvalued  equity at the corporate level, therefore negating the need to enter into inter  –creditor deeds on specific project related security.
  • The above facility has the ability to be recycled for a period of 5 years and can be  used in all manner as it relates to further acquisitions and developments.

The equity arrangement negotiated by DFP was regarded by the client as a breakthrough initiative at a time when traditional lenders have significantly tightened their lending criteria.

What the Client Says

“The equity arrangement negotiated by DFP was a breakthrough initiative at a time when traditional lenders have significantly tightened their lending criteria The funds injection is of a quantum that clears the way for Steller to progress 14 projects with a completion value of about $800m. The lenders is secured by way of equity in the dedicated 14 project pipeline – in effect, the lender has become a valued partner with us as we develop the business.”
Nicholas Smedley, Managing Director, Steller

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