Background
The client is an experienced developer with a strong family history in property development. While he had been involved in several projects previously, this was the first time he was undertaking a subdivision of this scale on his own
This project represented the developer’s next step in expanding his development pipeline within the Victorian market.
Project Overview
The project involved the subdivision of a landholding in Victoria’s Latrobe Valley into 26 residential lots.
The site had previously been supported by an interim land bank facility while planning approvals were finalised. With approvals secured, the developer was ready to transition the project into the civil construction phase.
The next step required a construction facility that would refinance the existing land debt and fund the subdivision through to completion.
Key Metrics
Loan Amount: $4,054,000
Loan to Value Ratio: 63.7% against valuation
Loan to Cost: 78%
Presales Secured: 9
Estimated End Value: Approximately $7,000,000
The Challenge
Stepping into a multi lot subdivision for the first time required careful guidance through the construction finance approval process and the associated lender requirements.
Although the developer had secured multiple presales, the deposits held were below standard lender thresholds. In addition, the site carried a second mortgage facility that needed to be fully repaid at settlement.
The developer therefore required a funding partner willing to consolidate the existing debt and fund the project through to completion.
A further challenge involved the timing of third-party reports. Quantity Surveyor and valuation reports had to be commissioned early in the process and prepared to a high level of detail; while ensuring they remained valid through to settlement without expiring.
DFP’s Strategic Solution
DFP took a hands-on advisory role from managing the Quantity Surveyor and valuation processes to ensuring the project’s costings were clearly presented to the incoming lender.
By coordinating these critical third-party reports early, DFP ensured the documentation was completed to the required standard while remaining valid through to settlement. DFP also sourced a capital partner willing to provide flexibility around valuation validity periods, preventing the reports from expiring before the transaction closed.
Through its relationship with a proven lender, DFP negotiated terms that allowed the developer to complete the subdivision without contributing additional capital.
The facility was structured so the initial advance at settlement fully repaid the existing land debt, including the second mortgage originally used to acquire the site, simplifying the project’s funding structure from day one.
Results and Benefits
DFP secured a $4,054,000 construction facility at 63.7% LVR, allowing the project to move into the civil construction phase.
At settlement, the facility repaid the existing land debt, including the second mortgage, leaving the developer with a single lender supporting the project through construction.
DFP’s coordination of the Quantity Surveyor and valuation reports helped keep the approval process on track and avoided delays caused by report expiries.
The facility also included no early repayment fees and no break costs, giving the developer flexibility when selling lots and executing the project exit.
With funding in place, the developer was able to focus on delivering the subdivision while sales progressed.
Client Testimonial
"I wouldn't hesitate in recommending DFP. From the start, Nick and the team were straightforward, knowledgeable, and focused on getting the best result for me. Nick explained everything clearly and kept things simple. No jargon, no pressure, just honest advice that made sense for my situation. He took the time to understand what I needed and worked hard to deliver a result that exceeded my expectations.
The whole process was smooth and efficient, and far less stressful than I expected. Nick kept me updated throughout, so I always knew exactly where things stood.
DFP delivered on every level."
Conclusion and Advice
This transaction highlights the importance of experienced advisory support when stepping into larger scale development projects.
For developers undertaking their first multi lot subdivision, early coordination of third-party reports such as Quantity Surveyor and valuation assessments is essential to avoid delays in the finance approval process.
It also demonstrates that common lending constraints, including lower presale deposits or existing layered debt, do not have to prevent a project from progressing when the right funding partner and structure are identified early.
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.
