balmain + commercial + big deals + july 2008
Only 2 presales required before construction
July 2008
| purpose | Our client required a facility to purchase a development approved site and provide construction funding for 10 retail showrooms, strata titled units. |
| structuring | Blended Senior and Mezzanine Facility |
| combined facility amount |
$4,770,000 |
| lvr | 98% of Total Development costs 73% of Gross Realisation Value |
| loan | Purchase Price: $1,600,000 Valuation Price: $2,000,000 Total Development Costs: $4,850,000 Gross Realisation: $6,600,000 Twelve (12) Months loan term |
| drawdown | Mezzanine facility was fully drawn at settlement. Senior debt facility was progressively drawn for construction on a cost to complete basis. |
| effective interest rate | 11.55% |
| presales | 2 presales were required before construction commenced |
Our client had to settle the site 30 days after the Development Approval issued. In that time we instructed the valuation, gained finance approval and settled on the site. We were able to lend against the uplifted site valuation which was $400k above the contract price. This enabled our client to borrow more funds to complete purchase, leaving his cash flow available to run multiple projects.
Our client held an expression of interest for the sale of 3 units. We successfully negotiated that only 2 of these expressions of interest needed to be converted to presales before construction started.
The facility provided the developer with the option of selling down or holding the remaining units at the end of construction.
We have successfully funded several other projects for our valued client using 4 different lenders. This alleviates over exposure with one lender and segregates their assets.
balmain + commercial + big deals + july 2008
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