Case Study: Speculative Industrial Projects with a Bank

I’ve lost count of how many small-projects property developers we’ve met that have been cash financing projects, thinking that it’s too hard to get construction debt.

This is a story about a couple of brothers doing speculative industrial and residential projects, not using ANY debt at all.

No surprise this was limiting the number of projects they could take on. They had previously tried asking banks for funding, but also unsurprisingly for someone trying to do speculative projects without any presales or leases, they just weren’t getting any love. It was all just too hard.

When we looked at their experience and what the projects were, we were actually confident we could secure bank funding.

But for the first couple of projects, they needed to get cracking ASAP, they already had the sites. We all agreed that a private credit option would be the best initial solution.

With a focus on expediency and flexibility, we looked towards our network of over 300 private lenders, ranging from private individuals to global institutions and everything in between.

We knew we needed a lender who understood industrial property, construction and the nuances of the local market that those projects were in. We found just the right fit in a single, private individual investor who I’ve personally had a relationship with for over 15 years. The lender expedited the approval process significantly, there’s no forms, no credit committee, no credit policies.

Once we drafted and agreed on a term sheet, we engaged lawyers to prepare the documentation ASAP, along with the quantity surveyor to do an initial report. With the first project squared away, for the next project, with more time up our sleeves, I’m pleased to say we did successfully secure approval for funding from a major bank, even though it was speculative, industrial with no pre-sales, no leases.

If your development plans are being constrained by traditional lending hurdles, get in touch with us to explore alternative funding options tailored to your unique needs.

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