Childcare centre development finance and construction loans

Ardent Capital Group brings the same method to every client: execution and strategy, clear advice for smart lending, and long-term growth. That means the right lender, structure and timing, straight advice so you borrow with confidence, and today's deal built toward where you want to be tomorrow. On a childcare development the lease is the file, and lenders read the same lease very differently. We tell you how yours will land before it goes anywhere.

It is sized against the gross realisable value of the completed centre, net of GST, and against the total cost to build it. Lenders write to a share of each and lend the lesser of the two. Major banks reach up to 65% of gross realisable value and non-bank lenders up to 70%, against up to 80% and 85% of total development cost respectively. We arrange development finance from $50,000 to $30 million.

It is the position most lenders prefer, and it materially widens the panel available to you. An agreement for lease fixes the rent the end valuation is built on and names the exit, which is why it does the job presales do on a residential project. Building without one is still fundable, on a narrower panel and generally with a higher contribution.

As an income producing asset. The valuer capitalises the rent payable under the lease at a yield drawn from comparable centre sales, and that figure is the gross realisable value the facility is written against, net of GST. It is a different basis from a residential project, where the end value is the sum of the individual dwelling sales.

Indirectly, and significantly. The places your consent allows determine the fee income the centre can generate, which sets the rent an operator will commit to, which drives the capitalised end value. A consent for more places supports a higher rent and therefore a higher end valuation, so the consent is worth reading as a commercial document.

No, and the numbers are different. A purchase is written against the value of the property as it stands, with the LVR driven by the lease and the operator. A development is written against end value and cost to build. If you are buying, our childcare centre property finance and childcare investment property loans pages cover that ground.

Yes. Where the site already has consent for the use, the purchase and the construction can sit under one facility with one valuation and no refinance in between. Where consent has not been granted yet, the land is usually funded first through a land acquisition facility and the construction funding follows once consent issues.

Yes, and it should be costed into the facility from the start. A centre carries more fitout than a comparable commercial building, with playgrounds, shade structures, kitchen, amenities and the works required before the service can operate. A feasibility that treats those as extras is the one that runs short before completion.

Usually not. Interest during construction is normally capitalised, meaning it is added to the facility rather than paid monthly, because the project produces no income until the operator takes occupation. That is standard on development facilities.

Either it is sold to an investor, which is the most common route because leased centres trade in an active market, or the construction facility is refinanced onto a term investment loan and you hold it. Where the construction debt matures before a sale settles, development exit finance bridges that gap.

Frequently because construction sits outside what that particular lender writes, or because the project sits below the size a bank development team is set up for. Some lenders list construction as unacceptable security outright. Development is funded by a different lender panel from commercial mortgages, and matching a project to that panel is the work.

Commonly 12 to 24 months, set against the build programme plus an allowance for occupation certificate, the operator taking occupation and, where you are selling, the settlement period. Setting the term to the build alone is a common error, because the exit sits after completion rather than at it.

Yes. A first centre with consent, a fixed price contract and an operator committed on a lease is a fundable file. What carries it is the strength of the operator, the builder and the feasibility rather than your own history in the sector, which is a large part of why these projects go to the non-bank panel.

The development consent, the agreement for lease or the operator heads of agreement, the fixed price building contract, your feasibility, the contract of sale or title for the site, and a quantity surveyor report where one exists. We can give you an indicative position from the consent and the lease alone.

Most of the time, no. Where a project requires significant preparation due to its complexity, a small mandate fee may apply, and we will always be upfront about this before any work begins.

Although we are based in Sydney, we service clients across all major Australian cities, including Melbourne, Perth, Brisbane, the Gold Coast, Adelaide, Canberra and Hobart, along with their surrounding regional areas. Wherever your project is located, we can arrange your finance.

Although our main speciality is property loans for business owners, we also assist with asset finance and working capital. On asset finance, that covers the plant and vehicles a building business runs, from excavators and scaffolding to site utilities and work vehicles. On working capital, we arrange business overdrafts, lines of credit and cash-flow funding to carry a project between drawdowns, to cover holding costs, and to pay consultants ahead of the next site.

Yes, and it is a common step. The construction funding works the way it does on any commercial development, and what changes is that the end value comes from a capitalised lease rather than from comparable sales, and that the fitout is heavier than a standard building. We will walk you through what the panel wants to see in the lease and the feasibility before you commit to anything.

No. Arranging finance and advising on financial products are two different disciplines, and we do the first. What we bring is the credit analysis lenders require, the structuring of the facility, and the strategy for putting your application in front of lenders whose appetite matches it.

Because we act as a credit representative under an Australian Credit Licence, we do not give financial product, superannuation, taxation or legal advice, and nothing we provide should be taken as such. Where your circumstances need that input, we are happy to work with your accountant, financial adviser and solicitor to understand the full picture before anything is submitted.

The information on this page is general in nature and does not take account of your objectives, financial situation or needs.