A firm of architects happened across a thin slither of land being divested by NSW State Rail.
Zoned “5 (b) Special Uses (Railway)”, it provided no real economic use but had unrestricted FSR.
A speculative acquisition, the purchaser's bank could not provide finance and providing the opportunity for a good example of how LINK can finance from acquisition & development through to construction with end user finance as well as residual investment finance.
The property was purchased as vacant, non-income producing land, irregular shaped being narrow and abutting railway lines to the rear, with unfavourable zoning and no economic use.
The developer struggled to complete the purchase. Its own bank would not advance funds on security of the land as there was no prospect of generating rent with which to service a loan.
The LINK Solution
After lengthy consultations with the developer, market research and interviews with commercial
valuation firms, LINK built a case for raising funds to complete the purchase while the purchaser went to work designing a project for a development application to Council.
A forward-thinking non bank financial institution was presented LINK’s credit memorandum which identified and provided analysis for various scenarios and outcomes. With a long-term view to funding, a single senior-debt facility was negotiated at surprisingly favourable terms.
The End Result
After 14 months and several applications to Council, development consent was granted for a high-density, dual-tower 90 unit complex over a two-storey 1,466m2 commercial/retail podium above 5 basement levels with anchoring on NSW State Rail land.
LINK fully funded construction of the ‘gateway’ project while recognizing the substantial up-lift in land value, assisted several purchasers with end-user finance and arranged long-term investment finance for the entire commercial-retail space retained by the developer.
The net project profit was calculated at 13.2 times the original purchase price of the land.
OUTLINE
Loan Amount
$32,450,000 (peak construction debt
Lender
Tier-2 Specialist NBFI
Lender Exposure
59% LVR vs GRV and 80% vs Total Project Costs
Loan Term
24 Month Construction Term followed by a 3 Year Investment Term