Senior Debt loan $3m for Land Bank Acquisition at 65% of Purchase Price Mornington Peninsula

Senior Debt loan $3m for Land Bank Acquisition at 65% of Purchase Price Mornington Peninsula

Development Finance Partners (DFP) was engaged to provide a funding solution for a land bank acquisition with development potential in Mornington Peninsula VIC.

DFP arranged and settled a 12-month land bank facility for $3m, representing 65% of the purchase price.

 

The key issues faced by this site acquisition

  • The client contracted to purchase the site in April 2018.
  • The client has supported major banks in the past however, when it came crunch time to settle on this parcel, credit conditions across the majors had tightened and this proved difficult to settle the transaction.
  • The other issue was valuation risk and assessment. A Valuation was arranged for a lender however was based on an “as is” basis.

 

DFP’s Role

  • DFP were engaged to assist with the clients prior to Christmas of 2018. DFP immediately obtained all relevant information pertaining to the borrower and the site purchase.
  • DFP acknowledged that this site was actually purchased for its potential as a development site and had instructions via its capital partner to have the property valued on an “as if developed” basis.  This valuation was to reflect the true intent and the accurate price paid for by the client for future optimisation of the site as it related to its development potential.
  • The valuation was undertaken and against all parameters the valuer agreed this was a solid purchase and verified the valuation at purchase price.
  • DFP’s understanding of the transaction was the catalyst for DFP to recommend to its capital partner that they underwrite the transaction based on sound fundamentals of the future development potential of the site.
  • The end result was the client was able to settle the deal under extended terms In February 2019 and is now able to move into the next phase with confidence for development applications.

 

What the client says:

“Baxter and I had been communicating for about a year and when this project came up it was well suited to DFP’s expertise given the current funding climate. We found DFP very approachable, very honest and they had the right connections in the industry. I liked their “no bullshit” approach. Ultimately the results for us was a successful one. We had three options on the table for funding the property and we successfully settled within a week of when it was due.  I would recommend them to any builder or property developer.”

 Ben Comelli, Managing Director, Tempo Group

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