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Case Study

Residential Development Site Acquisition

About

Acquisition of development site on Sydney’s Northern Beaches.

Challenges

Site acquisitions require access to funding to ensure capital is used prudently and ensure the various facets of the development can proceed with sufficient funds.

Our client faced a challenge with this site, as they exchanged on a residential development site with a short settlement timeframe.

The other challenge was that the borrower had their equity in another property, which was lowly geared with a major bank. To top it off, recurring sources of income did not meet major bank’s servicing requirements for additional lending that the client required.

One key requirement brought up by the client was to 100% fund the acquisition. They intended to accomplish this through equity contribution via their additional security property. It was also made clear that they needed the option for the collateral property to be sold during the term of the facility.

Finally, it was determined that the Development Application (DA) was to be lodged subsequently with approval expected within 6 to 9 months.

Solution

Ocian has secured a Stretched Senior Debt Facility with a trusted non-bank lender, including the refinance of the additional security property.

Results

This case was tricky, but we managed to secure a 1-year facility term to comfortably allow for the Development Approval to be achieved.

The loan was leveraged at 70% loan to value against both security properties. This ensured the facility included interest capitalisation and funding for all Development Application costs which is a huge win for the client.

On top of that, the mechanism for the collateral property to be sold and released with the loan to value maintained against the development site only was included.

As for all our clients, we strive to achieve the best terms to maximise the value of each asset. We are proud to have achieved market-leading pricing for a non-bank lender.

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