Background
The client is an established industrial developer who previously engaged Development Finance Partners to secure the original land bank facility for this site. With the land now held and the project ready to progress, they returned to DFP to arrange construction funding for the next stage of delivery. The client required a facility that supported commencement of works and aligned with the scale and location of their industrial development in Southeast Queensland.
Project Overview
The project is positioned in Ipswich, an emerging industrial precinct benefiting from the overflow of demand from Brisbane’s established industrial hubs. The development consists of a freestanding industrial unit of approximately 3700 square metres designed to suit a broad range of end users. Ipswich continues to grow as infrastructure investment, population expansion and the tightening of inner Brisbane industrial supply push activity outward. The completed unit is expected to appeal to occupiers seeking modern industrial space with larger floor plates, and the client aims to release the asset at the most advantageous point in the construction cycle to capture maximum uplift as the precinct matures.
Key Metrics
Loan Amount: $7,995,000
LVR Against Valuation: 65%
Loan to Cost: 74%
Presales: Nil
The Challenge
The primary challenge was securing a construction facility without pre-commitments in a location that is still building market depth. Most lenders require early leasing or sales evidence, particularly in emerging industrial areas. The absence of these commitments reduced the number of available funding options. Lenders also questioned exit certainty, given Ipswich’s evolving profile and the scale of the unit. The client remained confident that taking the asset to completion would achieve a stronger commercial outcome, however early sales would have required discounted pricing. The funding structure therefore needed to fully support their strategy and timing without forcing premature market engagement.
DFP’s Strategic Solution
DFP developed a targeted finance strategy that strengthened the valuation position and addressed lender concerns. We appointed a valuer with an in-house sales division to ensure the valuation reflected current buyer activity and up-to-date industrial market evidence. This provided strong support for the proposed on-completion values.
We paired this valuation strategy with a capital partner who has a proven appetite for industrial projects and an understanding of how value emerges in early-stage precincts. DFP presented a clear narrative that demonstrated the Sponsor’s experience, capability and delivery history across comparable assets. This established credibility and reinforced the client’s ability to execute the project to a high standard.
Through detailed negotiations, DFP secured a construction facility structured with no presales or pre-commitments. The facility aligned perfectly with the client’s intention to complete the development before taking it to market. Our understanding of lender appetite and longstanding private capital relationships ensured access to terms that traditional lenders would not consider.
Results and Benefits
The outcome was a senior debt, interest capitalised construction facility with no requirement for early leasing or sales. The structure preserved the client’s pricing strategy and eliminated pressure to secure early commitments at reduced values. By funding the project against maximum on-completion values, equity strain was reduced, and the client was able to direct their focus toward construction and quality delivery.
The facility enabled the project to proceed confidently in a developing industrial precinct where completed stock remains limited. This timing is expected to support a stronger market response once the unit is finished. The structure also enhanced the client’s ability to capture value uplift as Ipswich continues to benefit from the spill-over of demand from Brisbane’s established industrial markets.
Conclusion and Advice
This case demonstrates that with the right funding strategy and experienced advisory support, property developers can successfully execute projects even in emerging precincts and without pre-sales or pre-commitments. It highlights the importance of aligning funding structures with the Sponsor’s intended delivery strategy, rather than forcing early sales or leases that could limit potential upside.
Key advice for other developers is to carefully consider lender flexibility and capital partner relationships when structuring construction finance. Demonstrating a strong track record, clear project delivery plan, and understanding of market timing can help secure funding under conditions that support maximum value at completion. Ultimately, maintaining strategic control over the timing of a project’s market release can be just as important as securing finance itself.
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.
