Boutique Residential Development, Inner Melbourne

Over a three year period CVS Lane provided a range of funding solutions to assist a client deliver a boutique residential development, consisting of 13 whole-floor apartments.

Once development approval was granted for the inner Melbourne project, CVS Lane agreed to provide a $20.25 million first mortgage construction facility. As per common industry risk management practice, this was subject to the client achieving an agreed number of qualifying pre-sales.

CVS Lane agreed to provide a $20.25 million first mortgage construction facility once development approval was granted, subject to the client achieving an agreed number of qualifying pre-sales – as per common industry risk management practice.

A tight deadline for the commencement of construction (as agreed with the appointed builder) meant that the client was unlikely to meet the qualifying pre-sales target, which risked causing delays to the ultimate completion of the project.

CVS Lane then assisted the client in satisfying the pre-sales condition by arranging five renounceable sales contracts. The renounceable sales contracts provide for the sale of the apartments, at a discount, if they are not sold on the open market. While CVS Lane had full confidence the apartments would sell at or above market value, the renounceable sales facility ensured the project remained on schedule by assisting the client to meet the pre-sales target, thus allowing for construction to begin, whilst the client marketed and sold the remaining apartments.

The facility provided both financier and the borrower with a good degree of certainty.

At this point, CVS Lane’s $20.25 million first mortgage construction facility was triggered and the project began on schedule and ultimately, the remaining apartments were sold on market.

Subsequently, following practical completion of the project in late 2021, CVS Lane provided a residual stock facility, enabling the client to repatriate existing equity in the project to pursue other projects which continued for the few remaining unsold or unleased apartments.