Background
The developer has a proven track record delivering residential townhouse projects across regional New South Wales. Over several completed developments, they have built a disciplined approach to site selection, construction management and capital deployment. Liquidity remains a core focus. Each funding decision is assessed not just on the current project, but on how it supports future acquisitions and long-term growth.
Project Overview
The project comprises a 10-townhouse development in a growing regional corridor of New South Wales. Demand from owner occupiers and investors remains steady, supported by population growth and continued infrastructure investment in the broader area.
The funding brief was commercially driven. The developer required a refinance of the existing facility, full construction funding and no presale condition. At the same time, they wanted to reduce equity exposure while keeping senior leverage within standard market risk parameters.
Key Metrics
Senior construction loan: $5.059 million
Senior leverage: 70% of Gross Realisation Value
Mezzanine facility: $240,000
Total leverage: 75% of Gross Realisation Value
Presales required: None
The Challenge
Senior construction lenders continue to apply conservative leverage thresholds. A standard first mortgage construction facility would have required a higher equity contribution. That would have tied up capital and limited the developer’s ability to pursue new site opportunities.
In addition, the developer did not want a presale requirement. Presales can restrict sales timing, reduce pricing flexibility and introduce additional market pressure. Removing that condition was important to maintaining control over the project’s delivery and exit strategy.
The objective was clear. Refinance the existing position, fund construction at disciplined senior leverage levels, reduce equity locked into the deal and secure approval without presales
DFP’s Strategic Solution
DFP structured a layered capital solution that aligned lender discipline with the developer’s growth strategy.
First, DFP secured a senior construction facility at 70% of Gross Realisation Value. This maintained strong credit positioning and remained within standard construction lending parameters.
Second, DFP introduced a targeted mezzanine facility of $240,000. Rather than increasing senior leverage beyond market comfort, this tranche reduced the developer’s upfront equity requirement while preserving a balanced capital stack.
DFP coordinated both facilities concurrently, managing lender engagement and documentation in parallel to deliver a seamless refinance and construction outcome.
Results and Benefits
The layered structure provided immediate funding certainty and enabled construction to proceed without delay.
Importantly, the solution reduced equity tied up in the project. Preserving liquidity allowed the developer to continue acquiring new sites and maintain momentum across their broader pipeline.
The absence of a presale requirement also strengthened commercial flexibility. The developer retained control over sales timing and pricing strategy while progressing construction with confidence.
The funding structure supported both the successful delivery of this 10-townhouse development and the ongoing scalability of the developer’s portfolio.
Client Testimonial
“DFP delivered a well-structured funding solution and managed the process seamlessly. Their clear communication and proactive coordination of both senior and mezzanine lenders gave us confidence to move forward while preserving capital for future projects.”
Conclusion and Advice
In the current construction finance environment, capital structure directly impacts growth. Relying solely on a standard senior construction loan can increase equity requirements and restrict scale.
A disciplined combination of senior and mezzanine construction finance can improve capital efficiency while maintaining lender comfort.
For experienced developers seeking to scale, the right funding structure does more than complete a project. It protects liquidity, supports future acquisitions and strengthens long term expansion.
Image: Concept render for illustrative purposes only
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.
