Background
Development Finance Partners were engaged by a repeat client to assist with the funding of a construction facility for a subdivision in Armidale, NSW. The client required a comprehensive financial solution, to refinance their existing properties and secure funding for their new development project, without injecting additional cash equity.
The Project
The project involved the purchase and subsequent development of a 30-lot residential land subdivision. DFP facilitated the refinancing of the client’s property portfolio and structured a construction loan to support the subdivision project. The total financing amount required was $5.5 million, with a loan-to-value ratio (LVR) of 100%, over a term of 12 months.
The Challenge
The primary challenge was to secure funding for the site purchase and construction without requiring the developers to contribute additional cash equity. Therefore, the client's existing properties needed to be refinanced in a way that would maximise their equity to cover the costs of the new development.
DFP's Strategic Solution
Development Finance Partners (DFP) leveraged its long-term capital partnerships to meet the client's needs with a strategic financial solution. The key steps were:
- Refinancing the Property Portfolio: DFP structured a refinance deal for the client's existing properties, unlocking equity.
- Utilising Equity Leverage: The unlocked equity funded the purchase of the new development site.
- Securing Construction Funding: DFP arranged a construction loan that required no additional cash equity from the client, enabling the developers to proceed without financial strain.
Results and Benefits
Full Funding Secured: The client successfully obtained the $5.5 million required for the site purchase and construction.
No Additional Cash Equity: The strategic refinancing and equity leverage meant that the client did not need to inject extra cash into the project.
Efficient Process: DFP's expertise and strong capital partner relationships facilitated a smooth and timely financial arrangement, allowing the client to focus on the development.
Successful Project Kickoff: The client was able to proceed with the 30-lot residential subdivision, bolstered by the tailored financial support from DFP.
Conclusion
DFP's innovative approach and strong industry relationships helped the client secure essential funding for a major development project without incurring additional financial burdens. This case study showcases DFP's ability to deliver customised financial solutions, empowering clients to achieve their development goals efficiently and effectively.