Urgent finance required to purchase 6 apartments from liquidators

Urgent finance required to purchase 6 apartments from liquidators

Background

Clients approached Development Finance Partners (DFP) Director Bronko Kozel, early August 2019 to urgently obtain an approval for finance to purchase of 6 units from Liquidators. The agreed purchase price was $2.65m which was below the assessed market value of circa $3.5m.

The clients needed to act quickly to take the sale off the market and sought our assistance to make this happen.

 

The Key Issues

  1. Quick urgent response was needed to ensure a funding solution could be provided. DFP went about obtaining necessary contracts and any valuations to hand to firm up the position of the sales and qualify the purchases.
  2. Two new business partners involved under partition agreements. FIF undertook due diligence with the client’s advisers to ascertain their requirements and the proposed funding structure and equity availability for the project.

 

FIF’s Role

FIF was able to call on it’s wealth of experience to arrange urgent approvals to facilitate the approvals. Initially FIF secured an indicative letter of offer from one of its capital partners for 110% of the Purchase price, largely based on the quality of information available for the purchase, the client’s strong asset group position and local area knowledge.

This offer was provided to the clients, which provided the level of comfort needed to secure the site. This offer was a good solid offer at 10.60% for a 6 month term, to enable the clients to acquire the site then, further consider their options for the sites. However the clients decided they wanted to inject further own capital to the transaction, which would enable a lowered LVR to be achieved and a review of pricing and structure for the end result. The raising of their own individual capital from own resources was protracted via a Major bank and put pressure on the end settlement timing.

Finally, after securing their own personal equity requirements, the clients came back to FIF on 20/9/2019 to finalise the settlement now due 28/09/2019.

Within the week, that the client required to complete against, FIF arranged together with their Capital partners the formal loan approval, Valuations, loan documentation and settlement booked ready for 28/9/2019. The vendors later had settlement issues internally, and settlement was finally booked via PEXA and was affected on 4/10/2019.

The approved loan arranged by DFP was based on a higher equity injection and the end result was a 60% LVR loan over 12 months at 6.95%

 

What the client says

I had a relationship with Baxter and Bronko from years back. So I knew of them. I had a settlement that had to happen quickly and I got let down by the Banks. I spoke to Bronko and was able to get what we needed.

What I found really valuable was their efficiency and that what they said what’s going to happen, happened. Not like the banks where it drags on and on and they keep asking for more things. I really needed the certainty that they delivered.

I would recommend DFP to others in the property business especially if you are stuck like I was. To get you out of a mess, and if you need quick settlement, they are the people to go to.”

David Shalla

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