The importance of solid project finance during turbulent times

Solid and stable project finance during turbulent times is essential for success.

Key takeaways from the podcast

4.18 min

Market saturated with capital looking for a home leads to indiscriminate lending: The pitfalls of not understanding how a fund raises its capital and structures its deals and the risk return equation before investing your capital.

10.22 min

Impact of Cost and Time Escalations: Discussing how project cost escalations and particularly time blowouts are impacting profits and availability of equity which in turn is constraining new project starts.

13.35 min

Falling PRSV - Developers can’t rely on rising values to protect against mistakes or cost blowouts: Projects that were suffering from cost blow outs or an inability to secure pre-sales were previously able to rely on rising values. The market has now turned around putting pressure on Project Related Site Values and feasibilities making funding more challenging.

18.05 min

Challenges of changing funder mid-project: as a developer it’s important to have a good team around you including a lender that understands your position. It’s not impossible to change mid-project but it comes at a cost.

30.33 min

Developers need certainty of funding:  Dan explains how HCP raises the loan funds in full upfront, retained in a trust account ready to drawdown (in the developer’s name), and providing the borrower with the certainty they need. It pays to ask your lender the hard questions up front as they do you. Dan explains why.

34.35 min

Bank funding comes at a cost that isn’t always obvious: Dan explains why paying 8% to a private lender can make sense when you can get it from a bank for 5%. Speed to market, flexibility, higher gearing exit strategy can all make the bank alternative look expensive.

41.50 min

Case Studies:

  1. Two house construction project in Brisbane (lender changing lending parameters and HCP had to come intervene to help the situation)

  2. Help settle a development site that they have contract and not being able to finish the current project (time escalation etc).

46.40 min

Constructive Finance Book – helping you fund your next project.