Developers need to keep moving in a fast-paced market – leveraging equity in existing assets to get the next opportunity off the ground. But the bank doesn’t always see it that way.
To finance construction at every stage, developers need certainty of funding with a fast turnaround. And there’s a lot that goes on behind the scenes to make that happen, as we explain in our first of many Behind the Deal series posts.
Read on to learn more about the recent construction finance deal in Richmond Melbourne.
The details of the deal
Equity release and construction completion
Type of development
Mixed-use residential and commercial precinct
Bridging loan to long-term finance
A month is a relatively short turnaround for a $30 million loan, but we were able to give them confidence very quickly. We provided all the documentation to put everything in place, fast – because they had to have the certainty of settling on Brighton. That’s why it’s a better outcome for everyone.”
More complex scenarios are an exciting opportunity for Assetline to leverage the strength of our team and our balance sheet. And in this case, working with an experienced developer helped us resolve any potential issues quickly – together.
This Melbourne-based developer approached our Victorian team with a partially-constructed mixed-use site in Richmond as well as a new site acquisition in Brighton. They were seeking $30 million in equity release to complete construction, and settle and start works on the new site.
It was a challenging timeframe, as settlement needed to take place within a month. But the underlying security was sound. With a prime corner location on Swan Street in Richmond, the site had excellent transport links, and the riskiest aspects of construction were already completed. When finished, this commercial and residential precinct will be valued at $72 million.
The developer wanted to retain the asset post-completion and manage the property. So we suggested an exit strategy for a bridging loan in 15 months, enabling a transition to a suitable long-term solution in the near future.
In the meantime, they now have the funds needed to complete the build on time – and make the most of their next site’s potential sooner.
Despite the impact of lockdowns, it’s clear Melbourne’s construction activity is strong, and there is significant appetite amongst developers for funding.
If you’d like to discuss a construction, bridging or long-term loan scenario with us, please get in touch with our team.