Behind the Deal: South Sydney | $4.15m

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A delay in selling your property can come at a significant cost – unless you have a funding partner who sees beyond barriers and moves on opportunities.

When this developer’s completed duplex development in south Sydney took longer than expected to sell, his penalty payments were starting to erode his equity – facing a potential loss on his property in Botany and risks to seeing any returns on another duplex development in Chifley.

At Assetline Capital, we could see this was just a matter of timing, and could come up with the right solution to a complex funding problem.

The details of the deal

Location

Botany & Chifley, NSW

Loan amount

$4.15 million

Term

12 months

LVR

70%

Purpose

Refinance existing construction loan & residual stock sell down

Product

Construction finance & residual stock

Development type

Development refinance with equity release into the land settlement for the next site

Exit strategy

Sale of the existing property and sale of the new development on completion

As a lender focused on solutions, we worked closely with the developer to create a simple structure to a complex situation so he could retain profit and secure his next project. Following the completion and sale of all assets, he now has a strong net asset position that will set him up for future property development.”

Jason Lucas, National Sales Manager

Once the first properties were sold, the second site had every opportunity of success. We looked at the developer’s assets and liabilities across the entire property portfolio, and worked with him on a simple structure – refinancing an equity release on the portfolio. This bought the developer six months to achieve the right price on Botany with a development exit loan. In turn, this would allow him to repay that debt, while a construction facility for Chifley would ensure he could hit his project milestones and meet market demand.

Our skilled in-house valuation and quantity surveying teams shaped a commercial view of complex deal. We had an open discussion with the developer, explaining the potential risks in his situation. We then looked at their full property portfolio, assets and liabilities, and the current debt position with major banks.

Then, we developed a viable strategy to solve the existing debt challenge and maximise the full potential of the opportunity in Chifley. Setting the LVR position at 70% helped manage the risk of the asset sale for both the borrower and us. Within five days, we settled funds to clear the loan on Botany, and settled the construction facility for Chifley two weeks later.

Within three months of settlement, the borrower had sold his Botany properties, reduced his LVR to less than 70%, and has since completed and sold the properties in Chifley.

If you’d like to discuss a construction, bridging or long-term loan scenario with us, please get in touch with our team.

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