Commercial Property Business Loan Geebung

Transform a Residential Holding into a Commercial Development

Case Study: Funding a Bespoke Commercial Development in Geebung, Queensland

Mortar Finance was engaged to facilitate funding for an ambitious property development project in Geebung, Queensland, where an experienced client sought to transform an existing residential landholding into a high-quality commercial site comprising bespoke units for sale. The project required a carefully structured funding solution that balanced flexibility, risk, and long-term profitability, particularly given the client’s desire to avoid traditional pre-sale requirements.

Client Requirements

The client approached Mortar Finance with a clear vision: unlock the value of their residential land by converting it into a premium commercial development tailored to owner-occupiers and investors. The project had a total development cost of $8 million, with funding required at $5,850,000, representing approximately a 75% Loan-to-Cost (LTC) ratio.

A critical requirement was securing funding without pre-sale covenants. In most commercial development scenarios, lenders require a percentage of units to be pre-sold prior to construction commencing, as this reduces their risk exposure. However, the client believed that completing the development first would significantly increase the end value and appeal of the units, allowing them to command premium prices in the market.

This created a unique challenge: sourcing a lender willing to support the project based on the strength of the client and feasibility, rather than relying on pre-commitments from buyers.

The Mortar Finance Approach

Mortar Finance leveraged its longstanding relationship with the client, underpinned by a deep understanding of their broader financial position and track record. The client operated several successful businesses with strong, consistent cashflow, an important factor that would ultimately play a key role in securing favourable funding terms.

Rather than approaching the transaction as a standard development deal, Mortar Finance positioned it as a low-risk opportunity supported by a financially robust borrower. This strategic reframing allowed the team to explore lending options beyond traditional development finance channels.

Mortar Finance identified and partnered with a major business bank that had an appetite for well-structured deals backed by strong sponsors. Through detailed financial analysis, feasibility modelling, and presentation of the client’s broader asset base, the team was able to demonstrate that the project’s risk profile was mitigated by the client’s capacity to service the debt independently of pre-sales.

Structuring the Solution

The facility was structured to align closely with the project’s development timeline, ensuring that funds were available at each stage of construction without unnecessary cost or complexity. Key features of the solution included:

• No Pre-Sale Requirements: A standout feature of the funding arrangement allowing the client to retain full control over the timing and strategy of sales.
• 75% Loan-to-Cost Ratio: Providing sufficient leverage while maintaining a prudent equity contribution from the client.
• Flexible Drawdown Structure: Matching funding releases to construction milestones to optimise cashflow and minimise interest costs.
• Competitive Interest Rate: Secured through strong lender negotiations and the client’s favourable financial profile.
• Minimal Covenants: Reducing administrative burden and allowing the client to focus on delivery rather than compliance.

This tailored approach ensured the client could proceed with confidence, knowing the funding structure supported both the construction phase and the ultimate sales strategy.

Approval Process

Securing approval without pre-sales required a highly detailed and strategic application process. Mortar Finance prepared a comprehensive submission that highlighted:

• The client’s strong financial position and liquidity
• Proven experience in property and business operations
• Detailed feasibility studies supporting project viability
• Market demand for high-quality commercial units in the Geebung area
• Exit strategy based on completed unit sales rather than off-the-plan commitments

The lender conducted a thorough assessment, placing significant weight on the client’s cashflow from existing businesses. This provided assurance that loan servicing could be maintained regardless of sales timing.

As a result, a major business bank approved the application—an uncommon outcome for a development of this nature without pre-sale coverage. The approval came with minimal covenants and highly competitive pricing, reflecting the lender’s confidence in both the borrower and the project.

Outcome

With funding secured, the client was able to commence and complete the development without the constraints of a pre-sale campaign. This proved to be a decisive advantage.

By bringing a fully completed, high-quality product to market, the client was able to showcase the bespoke nature of the units, something that is often difficult to convey in off-the-plan sales. Buyers could physically inspect the finished spaces, leading to stronger engagement and increased willingness to pay premium prices.

The result was a highly successful sales campaign post-completion, with units achieving values above initial projections. This approach not only maximised the profitability of the development but also enhanced the project’s reputation in the market.

Financially, the project delivered a strong Internal Rate of Return (IRR), reinforcing the client’s strategy and providing additional capital for future developments.

Conclusion

This case study highlights Mortar Finance’s ability to think beyond conventional lending frameworks and deliver tailored funding solutions that align with a client’s strategic goals. By leveraging relationships, understanding the full financial picture, and structuring deals creatively, Mortar Finance enabled a complex development to proceed on optimal terms.

The success of this Geebung project demonstrates that, with the right expertise and approach, it is possible to challenge standard lending norms and unlock greater value in property development.

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