Six stage residential subdivision development in a desirable area of Christchurch
Loan amount:
$6.68 million
Structure:
12-month term with capitalised interest and fees
The challenge
A client had purchased a large site in a desirable area of Christchurch with vendor assistance. The property was to be developed in six stages, with partial vendor repayment at the conclusion of each stage.
They had obtained pre-sales of 29 of the 37 lots. All pre-sales were to private purchasers and had 10% deposits paid. The client was able to complete the civil works as part of his contribution to the development, albeit with some funding required.
However the project was unattractive to established lenders due to the lack of equity, despite pre-sales providing 1.5 times of total debt cover.
The solution
Global Pacific was able to provide a funding solution by persuading the vendor to underwrite any shortfall of funds and complete the development if the client was unable to. The added challenge here was to ensure the vendor wouldn’t be tarnished as a developer if the underwrite was invoked.
The subdivision was subsequently completed and all financial commitments were satisfied.