Client had a Bank approval, owner builder (related party transaction) started construction, the bank withdrew funding prior to 1st Draw down due to lack of pre-sales. The client wanted to start to show the market the project has commenced. This in turn had buyers fighting for the product (2013-2014).
Client offered other properties with existing bank loans as there was enough equity to satisfy our position (75% combined facility), which allowed a debt free site. Partnered with Mortgage Fund to provide Construction Debt at 60%, which meant there was no need for pre-sales and allowed the client to have 60+% of old sales cancelled due to sunset clause lapsing, went to the market for a 20% uplift.
ACMF provided temporary cash to allow builder upfront cash to commence construction until the first draw down commenced. ACMF monitored the progress payment flow, builder paid fortnightly, allowing sub contractors regular fortnightly payments. Happy sub contractors, allowed for a faster completion time!
Extra finance costs due to 120% LVR at the start was offset by $600k+ upside in the market movement taking advantage of the market as an alternative to discounting stock or diluting equity.
Reputation saved and a great overall result compared to the alternative.
Client able to move onto the next project.