balmain + commercial + big deals + may 2008
Construction funding up to 90%
May 2008
| purpose | Provide construction funding up to 90% of Total Development Costs for a three level, 2,600 sq.m. retail convenience centre and commercial office building. |
| loan limit | $9,600,000 |
| lvr | 90% of Total Development Costs (TDC), converting to 73% Loan to Valuation Ratio (LVR) upon practical completion of the development. |
| loan term | 12 months construction term with a rollover to an investment term |
| facility type | Progressively drawn variable cash advance facilities (Senior Debt and Mezzanine Debt tranches) |
| interest rate | A blended all-up rate of 10.30% during construction, reducing to 8.90% at commencement of the investment term. |
| interest cover | N/A. Interest capitalised for all debt during the construction facility term. |
Our client had entered into an unconditional contract to purchase a commercial site but due to delays in the realisation of profits from other developments, was short of the equity required to complete the purchase.
The client had secured a pre-commitment from the anchor tenant for the ground floor retail convenience centre but was not in a position to have any other pre-commitments until such time as potential tenants could see the development “coming out of the ground”.
Balmain Commercial’s solution for the client was to arrange for a blended loan product of $8,540,000 senior to 80% of TDC and a mezzanine funding $1,060,000 to 90% of TDC, based on their existing level of pre-commitment.
This was achievable after providing our preferred funders with strong evidence of the capacity of the client and their selected builder to deliver the end product and the strength of demand for the completed space by potential tenants. Settlement of the site occurred as scheduled and construction was able to commence within a short time thereafter.
This is another example of Balmain Commercial going “outside of the square” to deliver a solution to a client that, through unforeseen circumstances, was in danger of not being able to complete a contract for sale commitment.
balmain + commercial + big deals + may 2008
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