Parkview

A Brisbane apartment developer approached us for a capital solution to their 54-unit residential project that it had commenced and committed. The project was 50% presold however the developer advised that his equity partner, an off-shore Chinese investor, needed to exit the deal and they were looking for an equity investor in the development. The developer had not yet secured senior bank finance for the project.

Background

Parkview is a 54-unit residential project in metropolitan Brisbane. Parkview’s developer had committed to the project by buying the land, arranging the presales of units and contracting the builder who was underway with excavating the basement.

We carried out our due diligence and were satisfied with the fundamentals of the project, however, it became clear to us that securing senior finance would be very difficult for this developer due to market conditions at the time and a sharp pull back by all major lenders based on supply concerns in the Brisbane unit market.

How we helped

We negotiated a position with the Developer whereby KordaMentha provided the equity required to complete the project. A joint venture agreement was struck wherein we were involved with all aspects of the management of the development including attendance at all PCG meetings, marketing co-ordination and involvement in all major decisions for the project.

KordaMentha’s financing package was ultimately structured as a combination of mezzanine debt and preferred equity. We also assisted the developer in the procurement of senior bank finance on acceptable terms. Ultimately the Bank’s decision to fund the project was based on our involvement, our equity stake and importantly, our reputational stake in the project.

Results

The project was delivered and the major bank was repaid on time and in line with expectations without any complications. The developer ultimately made a profit on a project which, prior to our involvement, was facing serious challenges.