Lvl 29 Chifley Tower, 2 Chifley Square, Sydney NSW 2000
+61 (0) 2 9238 4218
Monday-Friday, 9AM - 5PM
Case Study

$42M @ 90 % of Total Development Cost Construction Loan for a very experienced developer

A very experienced developer approached his bankers of 30 years to fund his projects. As he is a builder developer not only was the bank expecting an onerous amount of loan conditions to be satisfied, but also wanted to lend on a LVR of 60 % of TDC and also take away the project management fee’s as they felt at their discretion they were able to do so.

We were able to provide progressively drawn construction facility of $42M and the borrower was also able to recoup invested time by having invoices for development management fee’s immediately released.

42 million dollar development in Sydney

Problems

  • Bank said no even though the developer was a long term client.
  • As borrower had no third party builder the bank took the view that it could further reduce the amount of finance provided
  • Borrower realised that they needed a private lender in Sydney who understood the market but had thier time wasted by a few brokers who indicated they could assist but in reality were not able to due to the private mortgage loan request being to complex for their proffesional skill level and they didnt actually have the database of private lending contacts like Acumen Finance does.

Solutions

  • Acumen Finance was quickly able to model the transaction and the create a compreshensive credit paper that was to a very high proffesional standard.
  • This was circulated to our high net worth private mortgage lenders within the Sydney area
  • The loan was approved within a week and transaction documents were available to sign the following week.

Result

The Property Developer who is also the builder were able to recover the internal costs and the facility was based on a quantity surverys report.

The Developer was also able to keep the project moving which saved any commercial problems with their pre-sales and sunset dates to make the transasction go smoothy and got a needed cash injection based on costs to date already spent.

LVR Servicing Interest Rate Security Valuation
60 % 12 Months 10 % PA First ranking mortgage and company charge None Required, physical inspection by investor was sufficient
Case Study

An industrial manufacturer in Sydney who is an owner occupier $5,000,000

Borrower an owner occupier of land with a large industrial shed needed some bridging finance from a private mortgage lender. This was because the cashflow of the business was based on lumpy contracts that underpin cash flow. So the ability to get their mainstream bank to release any further funds for business expansion was not possible.

This was not a problem for Acumen Finance as the site is within a zoning pocket that allows residential development. Based on our assessment of the development merits of the site we raised a private first mortgage facility with a private lender known to Acumen Finance who was based in Sydney.

Construction in Sydney for occupier of up to $5000000

Problems

  • Traditional Bank lenders aren’t able to fund on the back of future earnings or projected cashflows.
  • ATO debts and other cash flow problems present a complex scenario for the business to deal with as to continue trading smoothly the business needs immediate cash injection
  • Capitlized interest was required which was a product the Bank was not able to provide.

Solutions

  • Acumen Finance was able to write a credit paper that attracted a private mortgage lender.
  • The property had zoning for future development and this was not something that the Bank was prepared to recognise.
  • As a number of Acumen Finances private mortgage investors are or were property developers in their own right they understood the value of the property quickly as saw that the zoning was also an additional exit strategy.

Result

The Business got its cash injection secured by a registered first mortgage from a private lender who was based in Sydney.

The interest was capitalized so the cashflow of the underlying business was no longer constrained and the private mortgage lender also provided additional funds to lodge a development application based on the zoning being suitable for a highrise style development. This increased the value of the property substantially and the borrower was refinanced back to a bank within 12 months.

LVR Servicing Interest Rate Security Valuation
30 % 12 Months 10 % PA First ranking mortgage and company charge None Required, physical inspection by investor was sufficient
Case Study

Service Station Redevelopment Site in Tasmania $2,000,000

The borrower has secured a purchaser for a new service center that they are developing in an infill area close to the city and directly off the main highway. Challenge was that the purchase is subject to a DA being approved on the purchaser's preferred terms.

Acumen Finance was able to read between the lines from a planning perspective despite NO current approval and discern a worst case value based on current zoning. In addition, the borrower also pledged some other property security.

Despite the borrowers experience the mainstream lenders were not willing to fund. Acumen was able to secure the finance within a few days of having the application with a third tier private mortgage investor based out of Sydney,

A happy borrower

Problems

  • Traditional lenders aren’t able to fund on sites that have no Development approval.
  • Also due to a previous credit defualt and judgement being issued against the company the borrower failed to meet the banks stringent criteria

    Acumen understood that the borrower had many assets and the defualt was because of a genuine administrative oversight. EG: because the borrower had over 70 properties, the defualt was created due to outstanding land tax and rates which the borrower believed were paid via their accountants.
  • Complex business setup and many underlying trusts made up part of the security pledged to the lender.

Solutions

  • Acumen Finance wrote a credit paper that highlighted the fact that based on the zoning being for a service centre and the borrowers overall experience and a development approval was highly likely.
  • Through our consulation process we also indentified a number of viable exit strategies that would also give the private mortgage lender confort who was based in Sydney and didnt know much about the local market conditions in Tasmania.
  • Like many of Acumen's Finance credit pappers it spelled out the commercial logic that got the loan approved through private and non bank sources.

Result

The land banker was super thrilled because the cost of not doing this deal was greater than the interest with the net value created on the approval of the development application.

The private mortgage lender went on to provide further facilities to assist with some of the borrowers other similar projects as they saw that the client had a strong history of getting zoning changes approval and material changes of use.

LVR Servicing Interest Rate Security Valuation
35 % 12 Months 15 % PA First Mortgage over site and other sundry assets None Required, physical inspection by investor was sufficient
Case Study

$1,200,000 ATO Debt and Short-term Funding

A Sydney business owner found themselves with an ATO debt and was seeking added liquidity to cover for some cash flow challenges in the business.

Banks as a policy don’t get involved in lending when ATO debts are outstanding.

The private investors understand such scenarios occur, and business can come through such challenges.

ATO debt resolved, this picture of the calculator implies that Acumen has a great financing tools

Problems

  • Traditional lenders aren’t able to fund on the back of outstanding ATO debt
  • ATO debts and other cash flow present a complex scenario for the business to deal with - needs immediate cash
  • Complex business setup to identify assets that can be lend on

Solutions

  • Identify an asset in the land owners business that was unencumbered
  • The property had zoning for cafe and was a specialised waterfront property with a rowing / boat club
  • Arrive a quick valuation based on land value

Result

The land banker was super thrilled because the cost of not doing this deal was greater than the interest with the net value created on completion of this project. As the interest was capitalised it didn’t impact his cash flow for a year. The land banker added value to his asset base, while operating with average interest rate of 7% across all the borrowed funds. He was able to exit the loan in 8 months and the bank’s commercial manager continue to maintain relationship with the land banker.  

LVR Servicing Interest Rate Security Valuation
35 % Capitalized 12 % PA First Mortgage $2.8M
Case Study

$4,200,000  First Mortgage – 110 % of Purchase Price - Englobo Land, Refinance from an External Adminstrator.

A land developer, owner of an englobo had over the course of 10 years purchased a number of parcels, many hectares - enough supply for two decades!  

Total purchase price of $44M. It was a rezoning play for him and he had invested into rezoning applications.  

He sold the entire future precinct to another developer, who purchased it for $120M under option in 3 stages and staggered over 5 years. He (the land developer) received $30M for the first lot, and before the second year the option holder (purchaser) become insolvent.

This nullified the option agreement and the lot he sold for $30m was back on the market. One fifth of this land was with receivers when he engaged us.

Ability to get funding from the banks was near impossible based on RP Data and GFC like market conditions.

A 44 million dollar development zone

Problems

  • High risk with one land developer in receivership after first lot purchase in this regional township
  • While the LVR of over 100 % of purchase price required Acumen was still able to structure the deal to make it commercially balanced and attractive to a private underwriter / Joint Venture Partner

Solutions

  • Buy the block from receivers for $4M (a $26M uplift)
  • Bundle a second mortgage over the other 4 lots
  • Reduce the risk to a private lender with a rescind-able sales contract with the ability to purchase all 5 lots in the event of default for approximately $4M.

Result

With an exit strategy of a rescind-able contract we were able to structure the deal for a Joint Venture. A rescind-able contract, allows a Joint Venture partner to have more fundamental control of the property in the event of default. This is because the Joint Venture partner will OWN the property and is not tangled in messy receivership, then can make his own commercial decision about the future of the property. In this case, should the Joint Venture partner have taken full control of the property, they would have controlled an asset that could have yielded some 4000 residential lots over 15 years and for an investment of $4m.

LVR Servicing Interest Rate Security Valuation
35% Capitalized 18%
  • 1st Mortgage over primary security
  • Rescindable contracts to buy all the land for under 10m
None Required, physical inspection by investor was sufficient
Case Study

25% LVR Bank cannot fund for existing client of 15 years

A land banker who had just developed 300+ residential subdivision lot in Brisbane, Gold Coast area was in a sell down mode (selling completed properties).

He needed an extra $1.725M to undertake a second development application for subdivision on his land holdings separate to the completed titles being sold, This land an asset that had a value of $10M.  

The bank that had the relationship with this land banker could not fulfil this loan requirements any further despite a long history of repayment.  

25% LVR Bank cannot fund for existing client of 15 years

Problems

  • In sell down and a down market during banks can vary lending criteria
  • Bank had established a target of 10 sales/month and the borrower was clearing at 8 sales / month
  • While the LVR of (25.00%) is attractive, the bank is unwilling to lend to this client till the sales clearing criteria are met

Solutions

  • Provide a private first mortgage against the registered property
  • Reduce the lending risk with a second mortgage against all the other properties the bank held
  • A loan facility for 12 months with interest capitalised at 12%

Result

The land banker was super thrilled because the cost of not doing this deal was greater than the interest with the net value created on completion of this project. As the interest was capitalised it didn’t impact his cash flow for a year. The land banker added value to his asset base, while operating with average interest rate of 7% p/a across all the borrowed funds. He was able to exit the loan in 8 months and the bank’s commercial manager continue to maintain relationship with the land banker.  

LVR Servicing Interest Rate Security Valuation
25 % Capitalized 12 % PA
  • 1st mortgage over land
  • 2nd mortgage over land and buildings
  • 10m
  • $4m
Case Study

$33,000,000 Settled in 4 days

After depositing $5M towards a property development project, a Borrower that was a long term customer of a major Bank had their finance offer rescinded a week before settlement.

The primary reason was the banks had crossed an internal risk threshold for commercial investments in a specific region, based on risk thresholds calculations.

The developer was at risk of losing the invested $5M deposit and being sued for damages for not completing the contract.

Sydney harbor illuminated under winter sunset

Problems

  • $5M deposit paid on a prior conditional approval from top tier bank
  • Bank says “No”
  • Developer at risk of losing his $5M deposit

Solutions

  • Acumen put together a short term lending solution through an ultra high net worth individual/company
  • Lender received 18 % P/A for Investing the capital to write the loan

Result

The four month facility for $33M allowed the borrower to complete the purchase and Acumen refinanced the borrower back to another major Bank that wasn't having the same policy and capital allocation limit within 60 days.

LVR Servicing Interest Rate Security Valuation
76 % Capitalized 18 % P/A 1st & 2nd Mortgages over property None Required, physical inspection by investor was sufficient
Case Study

$95,000,000 Construction Facility in Perth

The progressively drawn loan, covered 100% of Total Development Costs. 

The borrower was a property development consortium that was outside of bank appetite due to size of the development and risk appetite.

The underwriter was an investment partner of Acumen based in Asia.

Within 20 days of having the transaction Acumen had the facility approved and waived a number of DD items due to its ability to discern the commercial merits of the transaction very quickly.

A digital model of what $95,000,000 construction facility in perth would look like

Problems

  • Declined by Bank due to capital allocation limits and regional limits.

    Private lenders were required that could accomodate a transaction of this size.

Solution

  • Acumen was Lead arranger in conjunction with a special situations fund based in Asia who invested in Australian mortgages. This was made up of a pool of investors who had experience in investing in private mortgages accross the world.

Result

Higher LVR Commercial Loan that even allowed Cashout for development management and achieved 100 % of Total Development Costs

LVR Servicing Interest Rate Security Valuation
75 % On Compeletion 15 % P/A 100% Of Development Cost None Required, physical inspection by investor was sufficient
Case Study

Christmas Eve Settled loan of $1,050,000

Also on Christmas eve we settled a commercial first mortgage bridging loan of $1,050,000 secured over a factory warehouse in a modern industrial estate based in Adelaide in which we had been formally engaged to raise the capital 4 days earlier.

Acumen then directed the lenders lawyers to prepare the transaction documents immediately The company requesting the funds was a dynamic and rapidly growing electronics conglomerate who had Asian trading partners that needed to be paid to keep the work in progress and inventory flowing.  and arrange for a settlement via PEXA that afternoon before C.O.B.

We were able to fund this loan via a private corporation that is backed by a Sophisticated investor being a Sydney Based Family office. We achieved a much higher LVR being 85 % of the properties value based on a First Mortgage and a company charge over the borrower.

The Lender did not need to undertake a formal valuation as they were able to get comfort based on the commercial merits of the transaction and having Acumen assist in the underwriting process to answer and questions and assist in prudent loan structuring to accommodate the shorter than normal time frame to complete the transaction.

A model of a building that would be given a loan from Acumen Finance

Problems

  • International business that is growing and owns commercial property. Has signed contracts from government and blue chip companies and needs cash to buy material to start scheduled jobs

Solution

  • Acumen works with Ultra High Net Worth investors who invest in private direct first mortgages as part of their fixed income strategy for high yielding cash flow with low downside risk due to holding security. This was a higher LVR Stretched Senior Mortgage Loan

Result

The Mortgage was able to be settled within hours of the mortgage security documents being created electronically and settled through the PEXA system.

LVR Servicing Interest Rate Security Valuation
85 % Monthly 13% P/A Registered First Mortgage and General Security Agreement over Company None Required, desktop and lease value was sufficient

Problems

  • Bank Declined Mortgage Loan. Because the borrower needed to remit money to his offshore company for growth. This was deemed too risky

Solutions

  • Based on our loan to value calculations and the borrowers demonstrated acumen and track record locally and overseas, We contacted private underwriter who approved the loan in 30 seconds

Result

The private first mortgage loan was the perfect outcome from our Peer to Peer commercial mortgage platform matching the transaction almost in real time.

LVR Servicing Interest Rate Security Valuation
75 % On Compeletion 15 % P/A Registered First Mortgage settled via Pexa None Required, RPData and other evidence was sufficient including a recent bank appraisal

Recent Transactions

A$134M
Provided bridging a clubed loan from a conglomorate of Singpaore Banks which achieved 80 % of total development costs. The borrower had reached the allocation limits with Australian Banks.
A$7m+
Procured mezzanine debt funding for residual stock from an asset reconfiguration bought from receivers

A$10m+
Refinanced residential and commercial property portfolio to release working capital for a start-up business
A$3M
Refinanced commercial property for succession planning and equity release using an LVR of 75 %

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+61 02 9238 4218
Monday - Friday, 9am - 5pm

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cl@acumenfinance.com.au
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Lvl 29 Chifley Tower, 2 Chifley Square, Sydney, NSW 2000 Australia

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