When a great development opportunity comes along, you need to move fast.
But what happens when short-term equity constraints are threatening to scupper the deal?
This was the situation facing our client, who’d been shown a fantastic off-market site that came complete with development approval and existing presales.
Our client needed to move quickly to secure the project from the incumbent developers. However, with no cash readily available, our client couldn’t pull the trigger unless they could find equity bridging finance. Easier said than done – but CPC knew a reliable lender that would consider the deal.
With a viable, structure funding solution in place, CPC then worked through the project financials with the client to come up with a reasonable purchase price (which was accepted).
To ensure everyone was on the same page, CPC arranged regular meetings between the client and the lender. This allowed the lender to better understand the project’s risks and opportunities, and develop a clear delivery and exit strategy.
As a result, the lender also agreed to become a shareholder in the project, with the following loan structure:
- Lender to take a 25% JV equity
- 6 month equity loan to allow the developer to maintain a 75% equity stake
- 6 month senior land loan (running concurrently with the equity loan)
- 18 month senior construction facility (after repayment of the equity loan)
Here’s what the client had to say about their experience:
“Given CPC had arranged funding for us on prior projects we turned to them when this unique opportunity came up to acquire another site in the same suburb. Without Dave’s relationships with his lenders we could not have moved on this site. We now have both a reputable lender and an experienced JV partner which further de-risks this one for us. We also liked the fact Dave’s lender was able to commit to fund this project all the way to completion so we could concentrate on project delivery and project sales.”
