The client was an experienced property developer pursuing residential development opportunities in metropolitan Adelaide.
Preserving available equity was an important part of the client’s broader development strategy, allowing capital to remain available for other development opportunities as the project pipeline progressed.
The project involved the acquisition of a development site in metropolitan Adelaide, with the client planning to progress the property towards a residential subdivision.
The immediate objective was to secure acquisition finance to complete the purchase, with a longer-term strategy to refinance the property into a residential subdivision facility as the project advanced.
DFP was engaged to establish a funding pathway that could support the acquisition while remaining aligned with the planned transition into the development phase.
Key Metrics
Loan Amount: $825,000
Location: Metropolitan Adelaide
Project Type: Land Acquisition with Planned Residential Subdivision
Facility Type: Acquisition Finance
LVR: 75%
LTC: 70%
Presales: N/A
The funding requirement became more complex after two potential finance pathways were unable to deliver the outcome required for the acquisition.
The initial lender was ultimately unable to proceed due to its credit requirements around the proposed guarantor structure.
DFP subsequently secured an alternative funding option; however, the valuation obtained through that lender was significantly below expectations. This reduced the amount of acquisition finance available and increased the equity contribution required from the developer.
With the acquisition still needing to proceed, the commercial challenge was to identify another lender capable of providing greater leverage on competitive terms.
Securing additional leverage was particularly important because it would reduce the developer’s upfront equity requirement and preserve capital for other development opportunities.
DFP reassessed the transaction following the changes to the first two funding pathways and approached an alternative lender whose credit appetite was better aligned with the project and the client’s requirements.
Rather than proceeding with a facility constrained by the previous valuation outcome, DFP presented the transaction to the alternative lender and worked through its assessment process to establish a new acquisition finance structure.
Importantly, the funding strategy considered both the immediate acquisition and the client’s intention to subsequently transition the property into residential subdivision finance.
DFP ultimately secured an $825,000 facility at 75% LVR and 70% LTC.
The final structure provided greater leverage while also achieving a lower interest rate than the funding options previously available to the client.
The $825,000 acquisition finance facility provided the funding required to support the client’s acquisition at 75% LVR and 70% LTC.
The higher leverage reduced the amount of equity the developer needed to contribute to the acquisition, preserving capital that could remain available for additional development opportunities.
The lower interest rate also improved the commercial terms of the funding compared with the previous options considered during the finance process.
Importantly, the facility supported the immediate acquisition while providing a clearer funding pathway towards the client’s planned residential subdivision and subsequent refinance.
Development finance outcomes can vary materially between lenders, particularly where valuations, guarantor structures and credit appetite affect available leverage.
For developers, reviewing the broader lender market when an initial funding pathway becomes constrained can identify alternative structures that better balance leverage, pricing and equity requirements while remaining aligned with the project’s next development stage.
1. Different development finance lenders can offer materially different leverage and pricing for the same project.
Lender credit appetite and assessment criteria can influence the amount of acquisition finance available and the commercial terms offered.
2. Property valuations can directly affect development finance leverage and the equity required to complete an acquisition.
Where a valuation constrains available debt, developers may need to contribute additional equity unless an alternative funding pathway can be established.
3. Higher-leverage acquisition finance can help developers preserve equity for other development opportunities.
Reducing the upfront capital required to acquire a development site can allow a developer to retain more liquidity for other projects within their pipeline.
4. Acquisition finance should consider the project’s next development stage, not only the initial site purchase.
Where a development site is intended to progress into a residential subdivision, structuring the acquisition facility with the future development finance strategy in mind can provide a clearer pathway between funding stages.
“DFP provided outstanding service in helping me secure a development finance loan for my property. From the very beginning, the team was professional, responsive, and genuinely committed to making the process smooth and stress-free. They took the time to understand my goals, guided me through the requirements clearly, and offered practical advice at each step”
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.