Senior Debt Finance  ($7.7M) – Residential Land Subdivision, No Presales – Brisbane

Senior Debt Finance  ($7.7M) – Residential Land Subdivision, No Presales – Brisbane

Development Finance Partners (DFP) were engaged to advise the Developer regarding a seven-stage land subdivision in the emerging residential suburb Morayfield, just over 40km north of Brisbane.  With all statutory approvals held and preliminary works commenced on site, the client was keen to turn soil and ensure the favourable civil contract quote was not allowed to expire.   The incumbent lender, a Big 4 bank, was seeking unconditional presales with 10% deposits, and wasn’t able to get comfortable with the Put & Call options held over most of the 130 residential lots to be completed.

The Key Issues Faced by this Residential Development Project

  • No conforming presales were held;
  • Works had begun to commence on site, hence time was of the essence;
  • Some “Vendor Lots” formed part of the sales held; and
  • Approved project staging meant a large amount of works (and cost) were required up front to benefit future stages

Development Finance Partner’s Scope

Development Finance Partners (DFP) were retained to provide advice, recommendations and to assist with deal structuring to mitigate the issues above and secure funding on appropriate terms to ensure the effective completion of the project in a timely manner.

Residential Development Finance: The Results Delivered

  • DFP secured unconditional finance approval to refinance the original mortgage over the land;
  • DFP advised, arranged and settled a land subdivision construction finance from a “challenger” Australian Retail Bank on terms not comparable or superior terms to the Big 4;
  • DFP assisted with and advised on the valuation and quantity surveying process, ensuring the proper treatment of sale agreements on foot, as well as the adoption of the minimum contingency amounts and removal of commercial risk weightings; and
  • Construction works for Stages 1-3 are now complete, with Stages 4-7 civil works commencing Q1 2017.

What the Client Says

“We would like to thank the team at DFP for their assistance recently in relation to the financing of our land subdivision project.
We were frustrated with the Big 4 Banks as we had a shovel-ready, de-risked project that was being delayed by the ever-changing bank policies.
Given the tight timeframes DFP performed, given their extensive relationships by providing competitive financing on terms compatible with our usual funding arrangements.
Our new relationship is beginning to flourish with the new Banker, and we are already discussing the second phase of the funding for our project.
We look forward to dealing with DFP in the future on other projects and we would have no hesitation in recommending the team to other clients.”
David Sharpe, Developer, Newcastle

What the New Banker Says

“Thank you to the Development Finance Partners team for your assistance and professionalism.
It was pleasing to deal with a proactive, knowledgeable and pleasant Development Finance Advisor (and good bunch of lads)…”

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