Financial Structures

Domaine Capital provides structure finance packages for specific property development projects. In most instances our clients want to maximise their available working capital and therefore seek to have the optimum level of “equity” in any given project. That equity can be as little as 5-10%.

Our facility is referred to as Risk Participation Lending. Conventional lending for the purposes of property development would require the borrower to inject 30% equity in any given project by way of cash or other collateral security as well as having equity in the development site.

Domaine uses a combination of “Senior Debt” which is secured by 1st mortgage and never exceeds 70% of the asset value either at the commencement of a project or against the value of the project on completion. “Mezzanine Debt” or a 2nd mortgage which is that level of funding secured over 70% up to 90% plus of the asset value at commencement.Senior and Mezzanine debt is similarly priced.

Key Gearing Ratios

Typically key gearing ratios of all projects funded are in the area of 90% on entry and between 65% and 80% on exit. This does not differentiate between, residential, commercial or other forms of real estate classes. Funded Project size is typically in a band from $2,000,000 up to $7,000,000 total funded cost inclusive of interest and other soft costs.

Evaluating A Project Funding Proposal

We look for each project to be self - supporting, nor want to rely on external support to make a project viable such as additional property. Preferably we would fund, all of the on going costs associated with a project. As the project financier we do not want to rely on the developer contributing a cost component, all of the costs should be contained in the funding model and fit within those key entry and exit ratios including contingency funding.

GST

We will fund the GST by providing a GST float within the project funding. GST is then claimed and repaid into the loan account.

Serviceability

All interest is capitalised into each project. Pricing will depend on the assessed risk parameters of each project, which will include consideration given to pre sales, pre lease, gearing ratios, location, and nature of the development. Senior debt and mezzanine are similarly priced.

Pre Project Approval

Domaine prepares a cash flow model based on the borrowers feasibility. This becomes the basis of the financial approval. Within the normal scope of activities on a building site the cash flow will govern what is disbursed or not, including contingency.

Domaine encourages its developers to work directly with its appointed Quantity Surveyors this promotes a smooth and direct relationship in relation dealing with progress claims in an efficient manner. The Quantity Surveyor acts under an established and specific set of standing instructions. The preferred Quantity Surveyors to Domaine are Napier & Blakeley.

Cash Flow Example
The following is a typical example