Location: Croydon, Melbourne

Project Overview:

• Site purchased in 2022 from a distressed seller
• 10 premuim townhouses
• Limited developer equity available
• Overall 95% loan on total project costs
• Loan amount $9,500,000
• No presales required prior to starting in site

Challenges Addressed by CPC:

• We understood the capital stack and focused only on lenders that were comfortable with the high leverage.
• We made sure the lenders understood the sponsors background and their track record of delivering quality projects
• Introduced a Sydney based preferred equity lender to a Melbourne based project
• Managed loan extensions due to council approvals taking longer than expected

Financial Solutions  by CPC:

• Structured a two loan approach (1st mortgage + preferred equity)
• Preferred equity term was 24 months to allow approval and construction
• The initial land loan lender was repaid at construction stage.
• The junior (preferred equity) lender at construction stage increased their stake and took  over the 1st mortgage security
• A zero presale strategy and fixed returns negotiated with the lender was key to retaining revenue upside
• Negotiated a reasonable construction loan term with the ability to extend if required
• We also allowed the ability for the developer to pay down debt during the build once their other projects settle

Project Progress:

• Construction commenced mid 2024 with completion due prior to xmas 2025
• Project marketing has commenced and expressions of interest being obtained
• The lender is updated regularly with a developer progress report and monthly meeting
• The sale prices on the completed stock are expected to break the suburb record for townhouses in the area.