HIGH-DENSITY RESIDENTIAL PROJECT, BANK FUNDED WITH EXTENSIONS
A firm of Quantity Surveyors introduced its clients, who urgently required project funding for a largely pre-sold, medium-density residential project.
The sponsors had approached all banks; only one approved their application but at excessively conservative terms which required substantial further cash contribution.
The Problem
Limited relevant sponsor experience; the main sponsor and his business and income source were domiciled off-shore. Pre-sales contract sunset dates required extension.
After project commencement, months long extensive inclement weather and water table issues caused flooding and 6-7 months of delays getting out of the 3-level basement.
The LINK Solution
LINK selected a bank with a specialized construction team: presenting its detailed commercial credit memorandum with full project and financial analysis, terms were promptly negotiated.
The End Result
LINK arranged full project funding with two consecutive loan term extensions to manage the builder’s Extension of Time requirements.
To cover lost pre-sales, the loan extensions provided for an orderly programmed sell-down of units thereby saving clients substantial costs in refinancing residual stock. LINK attended all monthly on-site PCG meeting and reported to the bank.
Outline
Loan Amount
$35,000,000
Lender
Specialist section of Tier-1 Bank
Lender Exposure
60% LVR vs GRV and 75% vs Project Costs
Loan Term
22 Months, Construction
Interest Rate
4.04% pa capitalized for the loan term
Lender Estab. Fee
0.65% of loan amount
