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Private Equity Joint Venture Solutions

Over the years we have successfully facilitated many Property Development Projects, the following are a small selection for your review:

 

Our client had owned and operated out of an industrial property located in inner Sydney. The immediate surrounding area was rezoned to a high density residential area.

Our client was not a property developer but wanted to develop his site in to a 110 residential apartments on the site and came to us for advise at an early stage.

The first step was arranging a land bank facility to cover the preliminary costs of the project such as marketing, DA, professional fees, etc

We worked with our client through the entire process including preliminary design, marketing, pre sales, and builder selection.

When the project feasibility was finalised by the valuer and QS our client needed circa 92% of costs. Pre-sales were strong however there was still a short $10M of the required level.

Solution

There were a range of challenges which had to be overcome in order for us to successfully complete the project:

Equity shortfall
  • We introduced private equity to cover the shortfall of $8M at 20% pa
  • We secured a guarantee to the senior debt provider to completely mitigate the senior lenders risk in full
Pre-sale shortfall
  • We mitigated the pre-sale shortfall by implementing a put and call option

No Previous Development Experience
  • A new SPV was to be formed in conjunction with a major property developer to act as the borrower with our client to provide the land as the equity. This effectively mitigated development experience risk.
  • Design Management agreement to complete the project
  • Borrowing structure – non-recourse with no personal guarantees
Senior Debt
  • We facilitated a senior debt facility to 80% of TDC
Overall Cost

Considering all costs such as mez/equity interest costs, presale option costs, Joint Venture agreement, Design Management and project management costs our client was to retain close to 65% of project profits. This was due to the fact that we had packaged the project to the point where it was ready to start and the parties we introduced came in right at the end of the process.

Senior Facility:$49.6M
LVR:80% of TDC
Rate:BB + 3.00%
Mez / JV Amount:$8M
LVR:92% of TDC
Rate:20%

 

 

Our client was an overseas developer who purchased a development site in Sydney metro. (70 apartments over 7 levels and 3 levels basement). Although having an experienced team, this was their first time undertaking a large-scale development in Australia.

Given the minimal presales our client had, lack of local development experience, and non-arms length building contract, no major bank would provide funding.

Solution

As Australia’s leading facilitator of private construction finance, we successfully secured funding via one of our private investor/lenders to complete construction.

Loan Amount: $18.9M
LVR: 75% of TDC

 

We were approached by a developer based in NSW who came to us with an opportunity. All his funds were tied up in other projects and he needed our help. What we did was fund 100% of the project through a private investor and the client didn’t have to put up any collateral. It was negotiated that the client would receive 30% of the profits while GCC received 70%.

Solution

What we did was fund 100% of the project and the client didn’t have to sell or refinance any of his other holdings. We negotiated with the client they would receive 30% of the profits while GCC received 70%.

 

A client came to us with a large land holding the family had owned for decades. They had no experience in development and were looking to build something and turn what they owned into something worth considerably more. After meeting them they were looking for a partner with expertise in development and build something together.

Solution

We organised the builder, plans from start to finish and had a very worthwhile and profitable relationship with the family and are looking at doing another project.