A major challenge for property developers is leveraging their equity effectively and being able to cut through red tape to secure flexible finance fast. Which is where expertise in development finance comes in handy.

When a client of Daniel Hausman, managing partner of Aventis Group, wanted funding to secure a $1.82-million site in Lawson, ACT, for a proposed 16-unit development, he put a call through to Baxter Gamble of Development Finance Partners (DFP).

“The land had the relevant zonings but a DA had yet to be lodged,” Hausman recalls. “My brief, on behalf of the developer, was to organise a land bank facility for the raw land and a high LVR. I called DFP because I knew they had the contacts and expertise to do it.”

Gamble, director of DFP’s NSW office, presented the proposal on the basis of the client’s overall financial strength, the minimal planning risk around the DA and the take-out options under a construction facility.

“DFP also provided a funding table whereby when we get the DA approved we can migrate the land bank to a construction facility,” Hausman says.

“And whereas banks at the moment will go to 75, 80 per cent of total development costs once a DA is approved, Baxter Gamble was able to get us 87.3 per cent TDC, with a component of PE [preferential equity] at a very reasonable rate – which my client was delighted to take because it meant they could keep that extra money for other deals.

“It’s settling [this] week and the client’s so happy they have … deals in the pipeline for substantial, $80–100-million sites,” Hausman adds.

While clients like Hausman’s represent its core business, DFP is not averse to funding starting developments such as that of a South Coast developer with little previous experience.

“The South Coast project was working with a developer who didn’t have a wealth of property developing experience, but he had a wealth of experience as a builder,” Gamble says. “It wasn’t a big exposure but, again, the affordability point was an underlying factor.”

Demonstrated sound capabilities are key, according to Gamble. “We look at factors – geographics, sponsors, credentials, capability – that are sound risk mitigators in any development and we aggressively support people who have the credentials, the solid performers. Because nobody wins if the property isn’t developed and sold.”

Gamble attributes his firm’s own solid performance to consistent focus. “We don’t do consumer finance, home loans, brokering – just construction and development financing,” he says. “And whether the market’s running hot or cold, we apply the same fundamentals.”

“We’re not chest-beaters – but ultimately I can’t find anyone else that achieves what we achieve in the time frame. And the fact that we can provide one testimonial a month, minimum, from a happy client speaks louder than anything.”

Read more at http://www.dfpartners.com.au/

Source: Property Council of Australia

Daniel Hausman, managing partner of Aventis Group, paid tribute to Development Finance Partners’ (DFP) speedy action. “The biggest hurdle we had was the fact that we had literally 14 days in which to procure the best part of $35 million in preferential equity, which was required to complete this acquisition,” Hausman says.

“DFP only put the deal out to suitable candidates given the timeframe restraints and the size of the deal. The team managed the situation successfully and delivered on time in very challenging circumstances.”

DFP settled the approximately $35 million facility in 10 days, delivering finance approval and settling within the designated time frame

DFP completed due diligence of the property, including refurbishment and development potential, and built a financing model in three tranches that identified the milestones in funding, LVRs and value uplift. DFP completed further due diligence on the client’s overall financial position and property portfolio to secure the finance.

DFP director Baxter Gamble credits the smooth and speedy transaction with previous successful outcomes and 30 years of experience.

“The main reason we could facilitate the transaction so quickly is because it forms part of our core business,” he says. “Even though it’s an extraordinary timeline in this circumstance, the transaction itself wasn’t anything extraordinary.

“We have a thorough understanding of asset classes and could see the value in this particular asset.”

Read more at http://www.dfpartners.com.au/

Source: Property Council of Australia