Preferential Equity – Medium density development
Noble Park Victoria – 91% Total Development Cost
- 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)
- 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
- 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
Could your next project benefit from some expert development finance? Get in touch.
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