Case Study | $3.6m Senior Debt Loan for 15-Lot Land Subdivision • DF Partners

Background

Development Finance Partners (DFP) was engaged by a client to provide a development finance facility for a 15-lot subdivision project located 50km northwest of Sydney CBD. The project faced significant hurdles, including council delays, access issues, and contractor changes. Despite these challenges, DFP successfully navigated the complexities and delivered a financial solution that enabled the project to move forward.

The Project

The client’s project involved the development of a 15-lot subdivision, which required a development finance facility to proceed. Over the course of 12 months, DFP worked closely with the client to secure the necessary funding. However, the project encountered unexpected delays, including access challenges for on-site services and extended waiting times for the local council’s determination of road access for utilities.

The Challenge

Several significant obstacles threatened to derail the client’s subdivision project, requiring DFP’s expertise in managing development finance. The primary challenges included:

1. Timeline Delays with the Local Council: Approval for road access and on-site services was significantly delayed, affecting the project's overall schedule.
2. Right of Easement Issues: Service providers faced difficulties securing easement rights, adding further complications.
3. Contractor Changes: Midway through the project, the civil contractor was replaced, disrupting the construction timeline and requiring new arrangements.

These challenges created uncertainty and financial strain, making it crucial for DFP to structure a flexible finance solution while maintaining consistent communication with all stakeholders.

DFP's Strategic Solution

DFP, with its extensive experience in development finance, worked closely with the client from the outset to create a feasible funding structure. This began with:

• Collaborating with the client on a projected feasibility and cash flow timeline.
• Outlining and agreeing upon a funding structure that addressed the client's objectives.
• Securing proposed terms through a formal service agreement.

Once the agreement was in place, DFP held multiple discussions with its trusted capital partners. After careful consideration, a proven capital partner agreed to collaborate on the project, offering favorable loan terms to support the client’s subdivision.

To keep the project moving, DFP prepared an executive summary for the capital underwriter, who quickly issued an indicative loan approval. DFP’s constant contact with both the client and the capital partner helped maintain momentum despite external delays, ensuring the project stayed on track.

Results and Benefits

Despite the challenges, DFP successfully secured a Senior Debt Loan of $3.6 million with a 12-month term for the client. The key results and benefits of DFP’s involvement included:

• Effective Management of Delays: DFP’s experience and relationships enabled them to navigate the council delays and contractor changes without significant financial repercussions for the client.
• Tailored Financial Solution: The flexible and structured finance arrangement provided the necessary capital to keep the project moving forward.
• Constant Communication and Support: DFP maintained regular contact with all parties, ensuring the client felt supported throughout the process and the project remained on schedule.
• Client Satisfaction: The client was delighted with the service and the successful outcome, noting the efficiency and professionalism of the DFP team.

Conclusion

Development Finance Partners played a critical role in overcoming the hurdles of this 15-lot subdivision project. Their ability to navigate the complex issues of council delays, easement rights, and contractor changes, while securing a tailored finance solution, highlights DFP’s expertise in development finance. Through collaboration, clear communication, and strategic financial planning, DFP ensured the client’s project could proceed smoothly, leaving the client highly satisfied with the results.

No matter the challenge, DFP have a wealth of experience and strong relationships with capital partners to help you succeed. Contact us to explore your tailored finance options.