Background
Development Finance Partners (DFP) was re-engaged by a long-standing client to secure residual stock finance for a recently completed townhouse development in Heidelberg, Victoria. DFP had previously sourced and settled the original construction loan during the early stages of COVID-19.
The developer, well regarded for delivering high-quality small-to-medium density residential projects, completed construction in August 2021. However, a new round of lockdowns across Melbourne delayed the ability to bring the completed dwellings to market.
With the construction loan maturing, the client required a fast and flexible refinance solution. Their objectives were to repay the existing facility, release equity embedded in the completed asset, and enable a measured sell-down strategy to maximise profitability.
Project Overview
The project comprised a completed boutique townhouse development in Heidelberg, a well-established suburb within Melbourne’s north-east corridor. With construction completed to a high standard, the developer sought to strategically sell down the dwellings while accessing equity for deployment into other portfolio assets.
The objective was to refinance the residual stock at a 70% Loan-to-Value Ratio, enabling both debt repayment and early equity release, without placing pressure on sales timelines.
Key Metrics
-
Loan Amount: $3.0 million
-
Loan Type: Residual Stock Facility (Senior Debt)
-
LVR: 70%
-
Term: No minimum term required
-
Security: Completed townhouse development
-
Location: Heidelberg, VIC
The Challenge
With Christmas and New Year approaching, timing was critical. The developer needed a fast, flexible refinance solution to:
-
Repay the existing construction loan
-
Release embedded equity for use across other investment opportunities
-
Support a measured sell-down of the remaining stock, maximising value rather than rushing sales
-
Secure finance quickly, despite the seasonal slowdown in processing timelines
Traditional banks were not suited to the timeline or flexibility required for this refinance, especially without presale obligations.
DFP’s Strategic Solution
Drawing on a long-standing relationship with a preferred capital partner, DFP negotiated a residual stock loan facility of $3 million at 70% LVR. The facility featured:
-
No minimum loan term, offering maximum repayment flexibility
-
Fast approval and settlement, despite occurring over the traditionally slow holiday period
-
Senior debt terms, avoiding the need for mezzanine structuring or additional capital injection
The lender also provided a flexible drawdown and repayment structure to align with the client’s planned sales rollout, allowing them to optimise return on each dwelling sold.
Results and Benefits
-
$3 million residual stock loan secured at 70% LVR
-
Construction loan fully repaid
-
Equity released to fund other development and portfolio opportunities
-
Flexible, no-minimum-term facility matched to the project’s sales timeline
-
Quick turnaround over the Christmas/New Year period
Conclusion
This case highlights DFP’s expertise in sourcing residual stock finance for completed developments, particularly where speed, flexibility, and equity release are essential. By delivering a tailored $3M facility at 70% LVR without minimum term constraints, DFP enabled the client to exit their construction loan, retain control of their sales strategy, and reinvest capital into future opportunities.
Looking for finance options for your next project, talk with our team today.
