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Case Study

Residential Land Subdivision Development

About

$7M to fund subdivision of 25 residential land lots in Sydney growth corridor.

Challenges

One of the main challenges for any financing was meeting sufficient levels of pre-sales. While our client achieved Development Approval and a good level of pre-sales, reduced deposits meant the pre-sales did not meet normal qualifying criteria.

Additionally, the client requested an early advance against the site before achieving a Construction Certificate or securing the builder. This would enable them to unlock funds for the development.

Given the level of pre-sales achieved and uplift in the value of the land since the acquisition, our client preference was a senior debt facility with a bank.

Solution

Ocian secured a Senior Debt Facility with a major bank.

Results

We negotiated on behalf of our clients and the financier accepted existing pre-sales for debt coverage. The case was made and the strong debt coverage and recognition of uplift in site value reduced the client’s cash equity contribution to less than 20% of total development costs.

The initial request of advance was also delivered upon with the advance being 65% of the acquisition price, which as mentioned is before securing a builder.

Our process enabled the facility to be secured through a competitive process which achieved a strong pricing outcome and also provided the client with an opportunity to open up a new banking relationship.

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