Lvl 29 Chifley Tower, 2 Chifley Square, Sydney NSW 2000
info@acumenfinance.com.au
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+61 02 9238 4218
Monday-Friday, 8am - 5pm
Case Study

$33M loan secured in 4 days

After depositing $5M towards a property development project, a major bank rescinded on its conditional offer.

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 his invested $5M.

Problems

  • $5M deposit 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 2.5 % Per Month for Investing the capital to write the loan

Result

The four month facility for $33M allowed this borrower from not losing his $5M deposit and the investor received a 30% return per annum.

LVR Servicing Interest Rate Security Valuation
76 % Capitalized 2.5 % Per Month 1st & 2nd Mortgages over property None Required, physical inspection by investor was sufficient
Case Study

20% 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.  

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 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 15%

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
25 % Capitalized 15 % PA
  • 1st mortgage over land
  • 2nd mortgage over land and buildings
  • 10m
  • $4m
Case Study

$4,200,000  First Mortgage – 110 % of Purchase Price - Englobo Land, Rescindable Contracts and Receivers In Funding

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 $42M. 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.

Problems

  • High risk with one land developer in receivership after first lot purchase in this region
  • 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

  • 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 rescindable sales contract with the ability to purchase all 5 lots in the event of default for about $14M.

Result

With an exit strategy of a rescindable contract we were able to bring lenders to the table. A rescindable, allows a lender to have more fundamental control of the property in the event of default. This is because the lender 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 lender have OWNED the property, he would have picked up 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 47%
  • 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

$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.

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

Recent Transactions

A$33M
Provided bridging finance to a property development group that was divesting and acquiring assets. Clients usual senior lender withdrew their offer 5 days before settlement & Acumen Finance was able to provide the funding via a HNW individual.
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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