The client was an experienced property developer progressing the next stage of a residential development following the successful completion of a land subdivision.
With the project moving from subdivision into built-form delivery, the developer was focused on maintaining efficient access to capital and preserving equity to support the remaining development pipeline.
Following completion of the subdivision, the remaining project assets had progressed to different stages of the development lifecycle, comprising vacant residential land, a duplex under construction and a completed dwelling being marketed for sale.
Despite these different stages, the existing debt remained structured under a single land facility.
The developer required a refinance and debt restructuring solution that better reflected the current position of each asset while supporting the continued delivery of the project.
Key Metrics
Loan Amount: $4.55 million
LVR Against Valuation: 70%
Project Type: Residential Development Refinance
Facility Structure: Land Finance, Construction Finance and Residual Stock Finance
Security: Vacant residential land, duplex under construction and completed dwelling
The existing land facility had been appropriate during the subdivision stage, however the project had since evolved.
With the remaining assets now spanning vacant land, active construction and completed residential stock, maintaining them under a single land facility limited the developer's ability to access the leverage available across the different asset types.
This resulted in more equity remaining tied up within the project and restricted cash flow that could otherwise support the remaining development pipeline.
The funding requirement was therefore to restructure the debt around the project's current stage while improving access to capital without requiring the developer to contribute further equity.
Development Finance Partners identified an opportunity to restructure the existing debt by aligning each component of the project with the appropriate funding product.
DFP refinanced the existing facility to a lender capable of supporting multiple asset classes within a single relationship and structured three separate facilities:
By matching each asset with a facility appropriate to its stage of development, DFP was able to maximise leverage across the different components of the project.
Importantly, all three facilities were placed with one lender, simplifying the client's funding relationship while establishing a lender capable of supporting multiple stages of the development lifecycle.
DFP successfully structured a $4.55 million refinance at 70% LVR, replacing the existing single land facility with a funding structure better aligned with the project's current stage of delivery.
The restructure unlocked additional borrowing capacity without requiring further developer equity and improved project cash flow by increasing leverage where appropriate.
By reducing the amount of capital tied up within the existing project, the new structure positioned the developer to continue progressing future stages while maintaining a single lender relationship across the different facilities.
Development finance requirements can change significantly as a project progresses from land subdivision into construction and completed stock.
Reviewing the funding structure at key stages of the development lifecycle can identify opportunities to improve leverage, release borrowing capacity and preserve developer capital. Aligning the finance with the current position of each asset can ultimately provide greater flexibility to support continued project delivery and future growth.
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.