Development Finance Partners, (DFP,) played a crucial role in procuring funds for it's client to construct a partly completed 88-unit development in Sydney’s North-Western suburbs.
The applicant acquired the subject site, a former 10-unit older style apartment block, in mid-2017, and in December 2018, entered into an option on-sale agreement with a large project marketing & development group.
Development Consent was subsequently obtained, however later Covid related challenges meant that the group were unable to complete the transaction.
The client decided to focus on taking the project forward themselves, completing below ground works and constructing a display unit to support a presale marketing campaign. During 2022 and the early part of 2023 they negotiated a series of design modifications with Council to enhance the overall concept and unit mix.
Key challenges in raising finance:
There were a few issues that surrounded this project, including:
- A partly completed building
- 70% loan-to-value borrowings were required to complete the project
- The pre-sales achieved were nearing sunset dates
- A relatively large borrowing requirement limited the number of potential lenders
- General market nervousness around rising building costs and high interest rates
DFP participated in all facets of the transaction. To start with, they successfully negotiated a loan approval with a long-term capital partner geared to the required 70% LVR, on attractive terms, and limited to 30% debt coverage in pre-sales.
Via they client's lawyer, DFP negotiated extensions to the presale contracts and introduced the client to a specialist marketing firm to assist in sales of the balance of units. Other actions DFP took for the client were:
- Liaising with the Project Manager to facilitate step-in documentation and negotiation of performance guarantees with the nominated builder
- Assisting with completion of all loan and supporting documentation.
- Assisting with final settlement
Type: Residential Finance
Loan amount: $41,000,000