Residual Stock First Mortgage Facility for equity cash out

Residual Stock First Mortgage Facility for equity cash out

BACKGROUND

DFP had been engaged by the borrower to obtain a first mortgage residual stock facility to provide cash equity out of a single residual apartment in a previous development completed by the group. The client has recently commenced a new project and wanted to use the equity in the apartment to start project early works. 

The borrower notified DFP to arrange immediate cash out finance as they wanted to commence the new project immediately.

 

LOCATION OF PROPERTY

Hampton, VIC

 

THE DEVELOPER

The Group is a vertically integrated, full service property development and construction group based in Melbourne. Until recent times, the Group has operated for most part in the background on the delivery of a large pipeline of projects. The company continues to construct and develop sites and will continue to do so for a number of years to come.

At present, the developer holds in excess of 20 projects which are either ready for construction or in pre-development phase. The Group is located in Victoria and employs approximately 20 staff.

The Group strategy focuses on building and developing quality developments within Melbourne’s inner to middle ring south-eastern suburbs. Specifically, the Group will look to deliver between 6-12 projects each year predominately on mixed-use residential projects, with all aspects of the development life-cycle to be managed in-house, ranging from site acquisition, planning, sales and marketing, project funding, construction, project management and settlements.

 

THE ISSUES: URGENT EQUITY CASH OUT REQUIREMENT

The developer was seeking immediate cash out to commence the new project immediately in line with the development timeframes for delivery. 

 

THE SOLUTION: FIRST MORTGAGE RESIDUAL STOCK FACILITY

Development Finance Partners (DFP) was engaged to provide an urgent funding solution.

DFP arranged a 12-month facility for $600k at an LVR of 65% approved with a new valuation completed and settled in under 3 weeks with the existing residual stock apartment as security. 

 

THE RESULTS DFP DELIVERED:

  • Finance – Secured; Terms Approved March 24 3 with a valuation completed and settlement completed April 14.
  • Loan Amount $600k , Valuation ‘As Is’ $925k = LVR 65%
  • Term – 12 months, 3 month minimum term


The client is now very happy that they have been able to obtain cash out to commence their new project while still keeping the stock apartment on the market with only a three month minimum term on the facility.

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