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December 12, 2023

Major Multi-Residential Development Funding Conversion

Transaction Summary 

Senior Debt Facility: $209 million

Mezzanine Debt Facility: $124 million

Term: 32 months

Senior LVR: 52.50%

Mezzanine LVR: 80%

Major Bank Senior & Mezzanine Conversion

On behalf of one our long-term Queensland clients, Stamford Capital is pleased to announce completion of the final phase of a structured funding solution supporting development of a major luxury multi-residential development on the Gold Coast beachfront.

The original financing strategy was initiated in early 2022 with a full underwrite of the project development funding. This was designed to overcome challenges in the construction sector, the formal engagement of the builder allowing early commencement of works on site with minimal requirement for contracted presales of project apartments.

Key to success was provision within the approved underwrite for the conversion of the original debt piece to a bank senior and mezzanine structure, expected to lower the project funding costs by tens of millions, assisting to underpin our client’s feasibility through a period considered quite hostile to the development industry. The introduction of this lower-cost bank senior debt was successfully executed off the back of a significantly de-risked project involving highly experienced sponsors, low pitched senior leverage, over 100% presale/senior debt coverage, tier-one builder contracted and advanced stage of works with inground risk mitigated through early commencement.

Another benefit of this structure was the ability to utilise residential market conditions to progressively increase sales revenue and absorb cost escalation, primarily funding costs, which had increased since commencement. If higher presale conditions had been required, this cost increment would have been more difficult to accommodate.

As a commercial property finance specialist with the experience and access to the complete capital market, Stamford Capital was able to design and execute a transaction of this size and complexity to support our client’s business needs.