Background
An experienced property developer based in Melbourne sought a tailored funding solution to support both the site acquisition and construction of a boutique residential apartment project in Preston, Victoria. The development comprised 22 high-quality residential units targeted at the growing inner-north Melbourne market. With initial marketing and presales already underway, the developer was eager to move forward with construction finance while maintaining project momentum.
Project Overview
This residential development is located in the sought-after suburb of Preston, known for its proximity to the Melbourne CBD, strong rental demand, and growing population. The 22-apartment project was designed to meet demand for modern, low-maintenance living in a well-connected urban setting.
Development Finance Partners (DFP) was engaged to structure a senior debt construction facility that would provide the capital required to deliver the project on time and within budget.
Key Metrics
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Loan Amount: $7.45 million
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Loan Type: Senior Debt
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Security: First mortgage
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Loan Term: 18 months
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LVR: 68% of Gross Realisation Value (ex. GST)
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Presales: 10 presales at time of application (65% net debt cover)
The Challenge
Major banks had significantly tightened their lending criteria for residential development over the past several years, particularly for projects where the developer also acts as the builder. This made it increasingly difficult to obtain construction loans without full presale debt coverage, typically expected to be 100% of the facility amount.
In this case, the developer had achieved only 65% debt cover through presales at the time of application. Despite the project’s strong fundamentals and a feasible margin, traditional lenders were unwilling to proceed due to these constraints.
DFP’s Strategic Solution
DFP worked closely with the client to validate project feasibility, refine construction costings, and confirm internal margins. After completing due diligence and engaging in-depth discussions, DFP formally onboarded the client under a service agreement.
Through its lender network, DFP secured interest from a trusted non-bank underwriter. A comprehensive valuation was commissioned on both ‘as-is’ and ‘as-if complete’ bases, confirming the project’s viability and supporting the funding structure.
Drawing on its specialist experience in non-bank construction loans and private development finance, DFP successfully arranged a senior debt construction facility of $7.45 million, representing 68% of the GRV (excluding GST). The solution was supported by the strength of the project and the client’s capability, despite lower presale coverage.
Results and Benefits
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100% of construction costs funded through the senior debt facility
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No equity injection required beyond land value
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Fast approval and settlement supported by QS and legal coordination
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Flexible loan structure aligned with the developer’s build timeline
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Enabled project launch without waiting for full presale coverage
This outcome highlights DFP’s ability to navigate restrictive lending environments and deliver results for residential developers seeking funding with partial presales and integrated builder-developer roles.
Conclusion
This Preston-based residential project is a strong example of how DFP structures senior debt solutions to unlock capital for apartment developers facing traditional lending hurdles. By securing 68% LVR finance with only 65% presale cover, DFP empowered the client to continue building without delay and preserve project momentum.
To chat about your next project and find out how we can help with property development and construction funding, request a call back.
