Case Study | DFP Secures 87% LVR for $28M Mixed-Use Development • DF Partners

Background

The client, an experienced Senior Development Manager, embarked on his first major project as a property developer, taking on the challenge of delivering a $28M mixed-use food and fuel development in Smithfield, located on the northern beaches of Cairns. Facing financial and market challenges, he partnered with DFP to secure an innovative funding structure, ensuring project viability and long-term success.

Project Overview

The development consists of a 5-lot land subdivision on a 15,230m² site, strategically anchored by national tenants, including 7-Eleven Petrol Station, Guzman y Gomez, Zaraffa’s Coffee, Subway, Pizza Hut, Oporto, a childcare centre, and a medical centre. With a total net lettable area of 2,208m², this project strengthens the region’s commercial landscape and serves as a key retail and service hub.

The Challenge

Our client and DFP navigated several significant challenges as he moved from Senior Development Manager to Property Developer:

• Taking on the role of a first-time property developer in his own right.
• Operating in a regional location, adding logistical and market complexities.
• Rising interest and cap rates, negatively impacting land and completion values.
• Increased construction costs, leading to higher equity requirements.
• Reduced project profitability.
• Extended construction timelines and delays, increasing holding costs.

These compounded challenges added layers of complexity, threatening project viability and straining financial resources.

Why Did the Client Choose DFP to Assist Them?

The client selected DFP for several key reasons:

• The quick, prompt, and professional initial engagement.
• A "family"-oriented approach that provided a personal touch.
• "Outside-the-box" thinking and tailored financial solutions.

DFP’s Role

The client discovered DFP through social media and chose them for their expertise in navigating complex financial challenges. DFP provided strategic advice and structured financing solutions to mitigate risks and ensure project success.

Transaction Metrics

Strategic Financing Approach

DFP worked closely with the client to manage risk and pivot strategies as needed:

• Transitioned preferred equity investors from secured first mortgage to unsecured subordinated preferred equity facilities behind a major bank.
• Achieved forward-looking Interest Coverage Ratio (ICR) hurdles with a strong pre-leasing strategy, enabling funding without presales.

Results and Benefits

• Full Funding Secured: Transitioned the client from financial uncertainty to being fully funded for his first major project.
• Growth Positioning: Positioned APG Developments for future opportunities by overcoming financing hurdles and ensuring project stability.
• Secondary Benefits: Strengthened relationships with financiers and demonstrated the viability of ambitious development projects in a challenging market.

Client Testimonial

"DFP has been working side by side with me for over two years, and I couldn’t speak more highly of their approach. Their support extends beyond finance—it’s unmatched from both a project and personal perspective. Their strategic guidance transformed what felt like a daunting challenge into a successful venture, thanks to their ability to adapt and navigate complexities. The close personal touch, deep understanding, and professionalism, backed by years of experience, truly set them apart. I would recommend DFP without hesitation—having experienced partners like them provides far more value than their scope alone would suggest."

“DFP’s strategic guidance turned a daunting challenge into a successful venture. Their ability to adapt and navigate complexities made all the difference.”

Conclusion and Advice

This case study demonstrates how a strategic financing approach, expert guidance, and innovative solutions can turn complex challenges into a successful development. By partnering with DFP, the client not only secured full project funding but also navigated market uncertainties, rising costs, and financial hurdles with confidence.

For first-time and seasoned developers alike, this project highlights the importance of working with experienced financial partners who go beyond traditional lending. With this first major project now successfully funded, the client is well-positioned for future growth and continues to see DFP as a trusted partner in his development journey.

 This developers advice to other developers:

“Partner with experts like DFP who can guide you through financial challenges and keep your project on course.”

Whatever the size of your development plan, DFP have a wealth of experience and strong relationships to help you succeed. Contact us to explore your tailored finance options.