An emerging developer with a background in project management engaged Development Finance Partners (DFP) to secure construction funding for their first development. Having worked previously with a large-scale, reputable builder, the client brought a strong understanding of project delivery but needed expert financial guidance to structure their first project independently.
Located in regional New South Wales, the project involved the construction of two high-end strata-titled residences. Designed to capture sweeping lakefront views, the dual dwellings were tailored for the area’s premium holiday and lifestyle market within the Snowy Monaro region. The client sought a finance structure that supported both the build quality and timing requirements in a market influenced by seasonal conditions.
Key Metrics
Facility Type: Construction Finance
Loan Amount: $2.08 million
LVR Against Valuation: 77% on completion (excluding GST)
Loan to Cost: 98%
Presales: Nil
Equity Contribution: Nil
The client faced a highly geared land position that limited the amount that could be carried into a construction facility. Refinancing into construction funding required a substantial cash contribution, creating a significant barrier to project commencement.
In addition, the regional location presented further complexity. Lenders typically apply tighter gearing in regional and seasonal markets, and in this case, were unable to extend construction leverage beyond their internal thresholds. With limited equity available, the developer required a creative finance solution to bridge the shortfall between the land debt being refinanced and the proposed construction loan.
This combination of factors created a challenging funding landscape that demanded strategic structuring to balance risk, meet lender requirements, and keep the project moving forward.
Drawing on strong relationships with both the senior and mezzanine lenders, DFP structured a dual-layered funding solution that allowed the project to progress without additional equity. A mezzanine facility was arranged to bridge the gap between the existing debt and the amount available through the senior construction facility.
DFP’s team negotiated a Deed of Priority that clearly defined the position of each lender, ensuring both facilities worked seamlessly together. This approach allowed the senior and mezzanine loans to coexist effectively, minimising risk while maximising leverage across the capital stack.
Through careful negotiation and alignment between lenders, DFP ensured the client could move into the construction phase confidently, with funding that supported both project delivery and long-term financial outcomes.
The outcome was the successful arrangement of both senior and mezzanine debt to fully cover the developer’s funding gap. The client was able to commence construction immediately, engage their chosen builder, and maintain project momentum without further delays or capital contributions.
By delivering a complete finance solution, DFP enabled the client to turn a complex funding challenge into a practical, progress-driven outcome. The project proceeded on schedule, and the developer gained valuable experience navigating structured finance for future developments.
This project highlights the importance of flexibility and strategy in development finance, particularly for first-time or regional developers. High gearing, limited equity, or market-specific constraints can quickly stall progress without a well-structured capital stack.
For other developers, the key takeaway is to plan early for potential funding gaps and work with finance specialists who understand how to align multiple lenders within one structure. With the right approach, complex challenges can be resolved efficiently, ensuring projects remain on track and financial risks are effectively managed.
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.