FINANCE SOLUTIONS
At Hyaline, we specialise in structured finance solutions for property development projects. Hyaline has access to a wide array of senior debt, mezzanine finance and private equity funding, so we can provide the best mix of funding for each lending proposal we assist with.
As a broad guide, we are able to source senior debt up to 70% of completed project value (or 80% of project costs), together with a mix of either (or both) of mezzanine and equity funding in some cases up to 100% of project cost. The use of mezzanine finance can significantly increase the return on client equity in a well structured project, as the following table indicates:
|
Mezzanine Finance |
||
| Project Feasibility | ||
|
Amount |
||
| Sales Revenue |
$10,000,000 |
|
| Deduct Project Costs (includes senior debt interest) |
$ 8,000,000 |
|
| Profit |
$ 2,000,000 |
|
| Funding Table | Senior Debt Only | Senior & Mezzanine |
| Senior Debt (80% of Costs) |
$ 6,400,000 |
$ 6,400,000 |
| Mezzanine Debt (10% of Costs) |
Nil |
$ 800,000 |
| Equity |
$ 1,600,000 |
$ 800,000 |
|
Comparison |
||
| Project Profit |
$ 2,000,000 |
$ 2,000,000 |
| Mezzanine Funding @ 20% p.a. |
Nil |
$ 160,000 |
| Profit after Mezzanine Finance Costs |
$ 2,000,000 |
$ 1,840,000 |
| Return on Equity | 125% | 230% |
As illustrated above, the use of mezzanine funding allows the developer to leverage project returns to higher levels whilst minimizing the equity contribution required, and allows the developer to place equity in more projects at once rather than have "all the eggs in one basket". The above example also shows how a developer with less available equity is still able to participate in larger transactions than would normally be the case.
Hyaline sources its mezzanine and equity funding from a variety of finance companies, private investors syndicates and venture capital sources.
Pricing
Hyaline is a market leader in sourcing premium funding for both investment and development transactions. Our close affiliation with a variety of major lenders gives us significant buying power, which is passed on directly to our clients. The following table gives a broad guide as to the pricing we have access to on typical projects and investments.
| Indicative Pricing | |
| Investment Property | |
| Senior Debt LVR to 70% |
1% to 1.75% |
| Mezzanine Debt LVR of 70 - 90% |
10% to 20% |
| Equity Finance LVR > 90% |
More than 20% |
| Development Property | |
| Senior Debt up to 80% of TDC |
1.75% to 3.5% |
| Mezzanine Debt 80 - 90% of TDC |
15% to 25% |
| Equity Finance > 90% of TDC |
More than 25% |
LVR = Loan to Value Ration
TDC = Total Development Costs inclusive of capitalized interest
The actual pricing we are able to achieve ultimately depends up the perceived strength of the project, including the level of equity contributed, recourse to sponsors, level of presales, quality of the builder etc. Hyaline can add significant value to your project finance by mitigating the level of risks in the project in order to provide the best project finance outcomes.
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