Case Study:

How a $75M project walked away from the banks – and found an even better deal.

‘Bottleyard’ is a successfully built, award winning 125 unit development in Northbridge, Perth WA. Development Finance Partners (DFP) were engaged to re-finance the project’s debt capital structure, due in part to delays in pre-sales settlements.

The Location

The $72 million development site is located in Northbridge, adjacent to the Perth CBD.

The Developer

The Handle Group is a locally owned, vertically integrated Property Development, Sales, Marketing and Project Management Company with more than 60 staff across Perth, China, Malaysia Singapore and Hong Kong.

Handle has competed in excess of 50 projects building more than 1200 homes throughout Perth.

The Brief

Refinance the project’s debt capital structure. The project’s existing debt capital structure comprised of a mix of senior and mezzanine financing which had been supported by a strong level of pre-sales resulting in debt cover in excess of 100%.

The Issue

Pre-sales settlement delays and maturity profile of existing mezzanine debt. Whilst a large number of the pre-sales settled in late 2017, the pre-sales to overseas purchasers of the apartments have taken longer to settle due to purchasers having to explore alternatives to bank funding given the regulatory restrictions in place on lending to FIRB buyers.

Given the maturity profile of the existing mezzanine debt, DFP was engaged for the timely re-financing of the debt capital structure with our institutional capital partners.

The Solution

Secure an LVR in excess of 65% plus a lower interest rate. The high level of pre-sales still in place, along with a clear strategy to allow for timely settlements with overseas purchasers, allowed DFP to secure an LVR in excess of 65% based on an amortisation schedule commensurate with properties due to settle. The quality, owner-occupier nature of apartments, as well as the location within a highly desirable part of the Perth inner city precinct, ensured strongly supported valuations despite the softening seen in the broader Perth apartment market in recent years.

What the Client Says

“We were introduced to Development Finance Partners (DFP) through a broker we had a relationship with. We were looking for a finance partner as the major four banks were getting very difficult with in when it came to development funding.

I was impressed with DFP’s thoroughness and I liked that their processes were very similar to a banking process and also found them to be very friendly to deal with.

We were able to refinance our debt to a lower interest rate and feel that we ended up with a ‘win-win’ on both sides, for us as the developer also the partner who came in on the refinance. I would absolutely recommend them to other developers.”

Peter Burke – Managing Director, Handle Property Group

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