Delivering pragmatism in Doncaster

Senior Development Finance, $6.5m
Case Study by Tommy F

Local Developer
6 Townhouses

Back in 2021, in Victoria, times were tough and our property and construction industry was feeling the pinch. There was a multitude of difficulties and big delays in construction, which not only stalled the progress of current work but also the pipeline of projects for future construction. But that’s exactly where we do our best work. So when we received a call to introduce us to our new client – a family business just like ours – we were ready to help.

Our client was at a standstill, having purchased a site for a townhouse project in 2021 in the southeast Melbourne suburb of Doncaster. They had obtained purchase finance from a lender but their facility reached maturity and required refinancing from a funder that would also fund construction and get the development moving. It was a stressful time and they felt they had nowhere to turn. Immediately, we could see beyond their short-term stress. We had faith in the development; a high-quality project comprising six townhouses in a sought-after location, and we had confidence in the team; Hub Project Management and Jeniton Construction, who all de-risked the project. Plus, we trusted in its long-term feasibility and we saw through the short-term market turbulence.

We created a plan for three separate loans. The first was to refinance the site at the end of the term of their initial loan, by switching to an investment land loan. The second loan was construction finance to fund building the townhouses, and finally, a residual stock loan to refinance the construction loan and enable our client to sell down the townhouses.

Had they not secured our trust and support, the project may have incurred huge time delays and additional costs using multiple lenders – or run the risk of not being built at all. But by taking a pragmatic, longer-term view when many other lenders stopped short, we looked after our client for the life-cycle of their project.

Today, the development is complete, most of the apartments are now sold and the loan is being paid back via sales proceeds, with a small residual balance refinanced into a residual stock loan. It’s a win-win. We helped our client deliver their townhouse development on time and on budget in a challenging construction and sales environment, and in turn, they trust us and they are already looking at other projects to work on together – a shining success.