Behind the Deal: St Kilda East, VIC | $5.5m

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Sometimes even the most solid projects can be derailed. And when delays put your development at risk of default, you need a partner who can give you certainty at speed.

When this experienced developer spotted an opportunity to develop seven premium townhouses in the sought-after Melbourne’s bayside neighbourhood of St Kilda East, she didn’t hesitate to move on it.

With all the element for a successful development – reputable builder, solid pre-sales and a strong strategy – she was on track to realise strong returns, as well as her goal of retaining two townhouses as investments.

And then COVID happened. Restrictions and lockdowns delayed construction by months, throwing the entire project off kilter. Her current loan was about to mature to full term, with two months of construction still left. She was close to defaulting on the loan, facing significant penalty interest rates that could put her investment plans at risk.

She needed a partner that would give her the time to complete construction, and settle the properties post-completion. At Assetline, we immediately saw the project’s potential and knew that our skills and expertise could help this investor get back on track and come out on top.

The details of the deal

Location

St Kilda East, VIC

Loan amount

$5.5 million

Term

3 months

LVR

70.0%

Purpose

Finalise construction & development exit settlement period

Product

Development Exit

Type of development

Residential (7 townhouses)

Exit strategy

Settlement of 5 pre-sold townhouses, retain 2 with bridging loan

I’ve come to expect a well-oiled machine from Assetline Capital. I know that I can talk to them and whatever they commit to will happen. I’m not wasting my time. I get the best possible value for money for the customer, and I know we’ll see the project through.”

Irina Maymon, Director of Access Lending

The developer only needed another three months to complete construction and settlement of the five high-end, three-bedroom townhouses. But with rigid conditions on her existing loan, she had to move fast to avoid penalties that would erode her project’s returns. It also would have left her with a higher level of debt on the two properties she planned to keep, making it much harder to refinance into a longer-term loan. 

Not many lenders are willing to step in mid-build with a three-month construction drawdown. But having worked with Assetline Capital before, the investor’s broker knew we would be able to help. 

Our in-house construction team worked with the quantity surveyor and builder to understand what was needed to complete the project and assess the risks. 

With five pre-sales out of seven, we knew the investor had a strong, well-thought out exit strategy. Settling the properties would reduce her loan significantly, making future refinancing of the two investment properties much simpler. 

Working closely with the broker, we were able to negotiate and structure a deal in less than four weeks. This gave the developer time to complete construction, settle the five townhouses and extend finance on the shortfall until she can refinance. It also helped her preserve her development profit targets – and retain the two investment properties.

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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