Case Study: Mixed-Use Site Finance without DA – Burleigh Heads

by | 12 Jul 2021 | Commercial Property, Property, Property Development

Our client had a large site on the Gold Coast under contract for some time while they worked through the DA application for a mixed-use service centre & industrial development.

The Challenge

Although it was originally expected that they would have DA before settlement of the site became due, complications experienced with needing approvals from multiple local & state government departments meant that they were going to have to settle prior to achieving DA.

The Solution

STAC Capital’s Leigh Blain took control of the challenge by actively driving the valuation process, engaging the valuer on a very specific scope that would fit in with our financing requirements.

Then having numerous lengthy discussions with the valuer regarding the key valuation drivers – such as comparative sales, market rates per metre with consideration for the location and use, capitalisation rates of the end product and the development feasibility – Leigh ultimately secured an “as is without DA” valuation well in excess of the purchase price.
The valuation also included “as is subject to DA”, which reflected the significant value the client had added via the design & feasibility process as well as the pre-commitments achieved.  

With known numbers then in hand, Leigh then approached the alternative debt market to seek terms that would suit the client’s needs – particularly (1) the willingness to settle prior to issuance of DA and, (2) ability to “step up” the debt facility limit based upon the “with DA” value, without needing to go through a re-assessment or re-approval process.

The Outcome

We secured a debt facility with terms that would provide the initial advance based upon the “without DA” valuation (being higher than the purchase price payable at settlement), which minimised the cash equity requirement from our client.
Furthermore, the “step-up” provision was included in the facility, allowing the client to immediately access further funds upon issuance of the DA.

Once the DA has been issued, the LVR on the purchase price will happen to equate to approximately 100% of the purchase price, which in turn will provide sufficient equity to allow our client to quickly move into the construction phase without further equity injection

This was an outstanding outcome for our client, which through close and collaborative communications with the valuer and lenders, STAC was able to help them navigate their funding challenges and arrive at a non-bank lending solution that met all of their needs.