Seven Capital Strategies That Drive Property Development Success

In this market, matching project drivers with the right capital is critical to success.

Combining their capital advisory services with acquisitions, development advisory and project management services, Point Polaris have the skills to secure better funding solutions for developers.

As Charles Bryant, director of Capital Advisory, outlines in this article: “It’s about forward-thinking and being prepared, then securing the right money at the right time to expand your business”.

Obtaining timely and reliable funding takes experience and precision. 

The way you approach financiers should be governed by timing and preparation.

Move too early and you risk the financier developing deal fatigue; move too late and you risk delaying the project.

The approach to financiers needs to be strategic with sound project fundamentals and risks managed appropriately. 

It is when solid and well-thought-through transactions are presented to equity and debt providers that traction is achieved.

A good strategy is to get a second pair of eyes on your proposed capital strategy and feasibility before contacting financiers.

Issues that financiers may not be comfortable with could be resolved before approaching financiers, so they are more likely to provide funding.

With these foundations, you’ll be able to establish relationships and build credibility with capital providers—that’s the key to timely funding you can count on.

As these relationships develop, similar funders will continue to fund multiple projects.

▲ Timing in funding is crucial for a development's timeline.

Delivering on your commitments by completing projects well is an excellent way to build credibility and get your next project funded. 

By setting up a quasi-line of credit in this way, your projects can gain momentum.

That means eliminating potential delays to reduce holding costs and total cost of capital therefore improving your Equity IRR.

It also means you’ll be able to get your money out sooner, so you can reinvest it into the next project.

Building a multi-project portfolio provides developers with the means to scale.

Look beyond your immediate needs and get strategic about securing funding.  Looking across your portfolio of projects, a whole-of-portfolio funding solution could work. 

Be careful to not cross-collateralise so that each project stands on its own two feet. 

As projects progress and value is created, developers can negotiate equity redraws before the completion of the project and use that equity to secure the next project.

For more information, download a recent whitepaper by Point Polaris, Seven Capital Strategies That Drive Property Development Success here.

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