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Property Development Finance
 

        Offering                    Interest Rate (p.a)                  Loan Term                            Amounts

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  Loan to                           From 8.50%                       6 months –  3 years             $250,000 - $30,000,000

  Company Borrower 

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Finance Today can provide development finance for residential, commercial, office and industrial property throughout Australia and can also obtain funding for land subdivisions. Development Finance can be structured in numerous ways, tailored to the specific needs of the project and the borrowers circumstances. Typical Construction funding generally fall into two main categories, that being hard cost based facilities and gross realisable value based facilities.

HARD COST LOANS

Hard Cost based facilities are typically offered by Banks and other major lending institutions. The loan amount is based on a maximum percentage of the actual hard costs of the development project. In most cases, the maximum advanced to the property developer 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 $30M

  • Terms up to 5 years

GROSS REALISATION (GRV) LOANS

Gross Realisable Value (GRV) loan facilities are based on the gross sales value of the project, on a on completion basis. The GRV finance facility focuses on the profit potential of the project, and are typically sourced through private funding lenders. By utilising GRV based products it means that potentially 100% of the project costs can be funded and less equity is required by the borrower:

  • GRV based facilities can fund up to 70% of the end value of the project

  • Loans up to $50M

  • GRV based loans offer more flexible lending terms with minimal or no presale requirements.

Comparison GRV vs Hard Cost

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

 

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

So in this example, the Property Developer under a GRV based loan facility is required to contribute $1.6m less in cash/equity to complete the project vs a hard cost based facility. Whilst preserving additional cash, it also increased the property developers IRR or return on equity as they are leveraging more borrowed funds than would otherwise be possible under a Hardcost based facility.

Additional Funding

In situations where the Property Development projects 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 or preferential equity finance.

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Call Finance Today on 1300 886 580 for a no obligation discussion on your requirements, e-mail us or make an appointment online.

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