DFP secured construction finance of $60.562 million at a LVR of 76% GRV
The project first received the green light in 2013 to build an office and apartment complex in the blue-chip suburb of South Perth, Western Australia. Comprising of a 13-level residential tower of 75 luxury apartments, and a 10-level commercial office building providing almost 6,000 sqm of A-Grade strata office space.
Construction started in 2014 but was halted due to market conditions. Around 75% of the apartments were pre-sold, two-thirds of the office space pre-leased to a single tenant, then almost overnight the bottom fell out of the Perth market.
The downturn in the market saw property prices in Perth tumble resulting in the office tenant walking away and finance falling through and for five years the project stood abandoned.
When DFP was engaged, the project had a long and troubled history and a number of previous attempts to revive it had failed for a variety of reasons.
The developer has been developing property for over 20 years across Australia. With a focus on Perth, the company is recognised as one of WA's premier urban infill developers, delivering premium quality projects across a diverse range of uses.
- Construction started in 2014 and was halted for over five years
- The project has a large commercial component and due to this, the developer found it difficult to obtain finance
- Vacancy rates significantly increased from zero per cent to 20 per cent in a short period
- Ongoing challenges with WA borders closed due to Covid-19 lockdowns, and escalating building costs kept driving the debt requirement higher during the process
Construction finance secured of $60.5 million at a LVR of 76% GRV
DFP engaged with a new financier and finalised a $60 million debt restructure and workout at a LVR of 76% GRV. The gross realisation of the project was valued at $79.325 million.
By going back to first principles and re-designing the complex capital structure of the One Richardson/Richardson Centre development from the ground up, DFP was able to engage a new financier and convince the existing creditors to get behind a re-energised push to finish the project.
With first mortgage finance of $60.5 million secured at an LVR of 76%, the developer found it easy to raise equity for the small remaining capital requirement.
However, even with finance in place and all stakeholders on board, there were ongoing challenges. With WA’s borders closed due to Covid-19, construction prices were soaring, and even as the new contracts for One Richardson/Richardson Centre were being drawn up, rapidly escalating build costs kept driving the debt requirement higher and higher.
DFP coordinated with the quantity surveyor and a financier to ensure all stakeholders remained confident in the project.
What the Client says...
"As soon as we met the people at DFP, we could tell they were seasoned financiers",
"We had always known it was going to take a really experienced and sophisticated operator to see through all the history, the baggage and the very complex capital structure of this project to appreciate it for what it actually was, and that's how we found DFP."
Development Finance Partners find innovative solutions, requiring less equity, so you can start your project sooner. We specialise in construction and development finance and can tailor a funding package to suit your project. To discuss your options, get in touch with us today.