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Development Finance


Finance Today can facilitate development finance for residential, commercial, office, industrial, retail and hospitality orientated property throughout Australia and can also obtain funding for land subdivisions.

Development Finance can be structured in various ways, tailored to the specific needs of the project and the borrowers circumstances. Typical development funding structures generally fall into two main categories, that being hard cost based facilities and the gross realisable value based facilities.

Hard Cost Facilities

Hard Cost based facilities are typically offered by Banks and other major institutions. The loan amount is restricted to a maximum percentage of the actual hard costs of the development project. Typically the maximum percentage advanced to the borrower is approximately 80% of the hard costs of the project.

  • Finance Today Hard Cost Development facilities can fund up to 85% of the Total Development Costs
  • Loans up to $100M
  • Interest Rates range from 90 day Bank Bills + 1.25% to 3.50%

GRV based facilities

Gross Realisable Value based facilities are based on the gross sales value of the project, on a cost to complete basis. The GRV based facility focuses on the profit potential of the project, and are typically sourced through private funding channels. By utilising GRV based products it means that potentially 100% of the project costs can be funded.

  • GRV based facilities can fund up to 70% of the end value of the project
  • Loans up to $100M
  • Interest Rates start at 6.50% (90 day BB’s + 2.50% to 6.00%)
  • GRV based loans typically offer more flexible lending terms with minimal or no presale requirements.

Comparison

If for example a development project to build a residential block of units will cost $5m to build, and the end sales prices of the units were $8m, the following will be the maximum borrowing potential:

Hard Cost Structure

By using the hard cost method at 80% the maximum borrowing potential is $4,000,000 (80% of $5m), or a maximum of 80% of Hard Costs.

GRV Based Structure

By using the GRV based facility at 70% the maximum borrowing potential is $5,600,000 (70% of $8m), or up to 100% based on Hard Costs.

Additional Funding

In situations where the project proponents require additional funding above those offered in a Hard Cost or GRV based facility Finance Today can structure additional funding to meet these needs by using either mezzanine finance or equity finance.
 

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