Preferential Equity – Medium density development

Preferential Equity – Medium density development

Noble Park Victoria – 91% Total Development Cost

Issues

  • Client had numerous projects commenced / ready to be commenced and had significant equity tied up in the projects
  • Their model is to presell to 100% debt cover to secure bank funding on all the projects
  • Client required relatively small amounts of Preferential Equity relative to the market (ie normal minimum $5.0m)

Scope

  • Development Finance Partners was engaged to provide an equity solution
  • Work up a Borrowing/ Security structure
  • Funding model required for (PE)  with Capital and Coupon returns in line with the PE Market
  • Model return on Equity to the Client based on the Senior and PE layers (this actually demonstrated the higher return on Equity by using PE)
  • Provide PE financing

Results

  • Development Finance Partners provided the  Preferential Equity  to 91% TDC
  • Development Finance Partners facilitated within 14 days.
  • The Client now has the required equity to enable leverage into another development

What the client says

“From a developer perspective it allowed us to access locked equity on order to fund our next project. The well-structured deal, which was circa a few million dollars, was not readily available from banks and DFP offered a viable solution.
“Preferred equity is certainly a solution that we will use again to unlock the funds we need to support future growth,” Nicholas Smedley

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