Residual Stock Finance For Newly Completed Townhouses – Beckenham, W.A.

Residual Stock Finance For Newly Completed Townhouses – Beckenham, W.A.

PROJECT BACKGROUND

Refinance of residual Stock, for newly completed townhouses to help a developer meet their obligations during wildly fluctuating market conditions as a result of the COVID-19.

 

LOCATION OF PROJECT

Beckenham W.A.

 

DEVELOPMENT

The development is comprised of 7 Boutique single level residences.

 

THE DEVELOPER

The development group commenced development of the project in March 2019 and completed and titled the properties in March 2020.

 

THE BRIEF

The brief to Development Finance Partners was to secure, short term residual stock finance product, to refinance all 7 townhouses, and allow for sell down of 4 of the townhouses, with a minimum overall term of 3 months to provide scope for the group to continue sell down of their stock.

 

THE ISSUES

At time of application, the titles had not yet been issued and were all values were based on “in-one line”. Also, seeking a lender that has flexibility and commercial acumen to work with the client’s brief.

 

THE SOLUTION

DFP ascertained appetite from a DFP underwriter to provide a flexible facility where 3 properties were to be held for 12 months (minimum 3 months).

Based on the detailed analysis from DFP and understanding of the transaction, DFP secured support from its underwriter to fund the transaction. The funder undertook a valuation which showed that the W. A. market was still recovering and was under the clients market expectations. However, they were still confident to proceed, on slightly reduced terms.

The lender, whilst looking at the titles not yet being issued, was still able to get comfortable with lending to the “on completion” value instead of “in one line” which would not have worked for the client. As a result of both DFP working closely with both the client and the funder, the understanding was to proceed forward and shortly after documents were executed, titles were subsequently issued to the benefit for all.

DFP also facilitated a part cash-out facility against the asset held by the clients to provide sufficient funds to equitise the development project.

 

THE RESULTS DFP DELIVERED:

Finance – Secured, Terms Agreed
Loan Amount – $1,650,000
Term – 12 months

The client is now very happy that the Residual Stock funding is in place and settled in the current environment.

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