Residual stock finance for property developers

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 residual stock that method starts with the valuation. We brief the valuer on the settled sales in your own project before an application goes in, because the in one line figure is what sizes the facility, and a valuer working without that evidence will report a wider discount than the stock deserves.

It is a facility secured against the completed, titled dwellings in a project that have not sold yet. It is used at the end of a development, once the occupation certificate is issued and the titles have registered, to repay the construction lender and hold the remaining stock while it sells. The facility reduces as each dwelling settles.

Most often when the construction facility is due for repayment and the sales campaign has not cleared enough stock to repay it in full. It is also used to release equity from a completed project so you can settle the next site, and to move off an expensive construction facility once the build risk has gone.

The valuer reports two figures. The retail total is the sum of the individual dwellings sold one at a time over a normal sales campaign. The in one line figure is what the remaining parcel would fetch sold together to a single buyer, and it is lower because the buyer is taking on the holding cost and the sales risk. Residual stock facilities are sized against the in one line figure. The gap between the two narrows as the line gets smaller and as settled sales in the same project prove the pricing.

It is set as a share of the in one line value of the unsold stock, not the retail total and not what the project cost to build. The share itself moves with the size of the remaining line, the settled sales evidence and the lender. Send us the schedule of unsold dwellings and the settlements to date and we will come back with the numbers the panel will actually write.

Yes, for a true residual stock facility. Registered titles are what allow the lender to take security over the specific unsold lots and discharge them individually as they settle. Where titles have not registered yet, the position is usually funded as development exit finance instead, which we also arrange.

A release price is set for each dwelling at the start. When a dwelling settles, that amount is paid to the lender and the title is discharged, and the facility reduces accordingly. Release prices are usually set slightly above the pro rata share of the debt so the facility pays down faster than the stock sells, which protects the lender as the line gets smaller.

Often yes, where the expected settlements will clear the facility comfortably inside the term. Capitalised interest is added to the facility rather than paid monthly, which matters when the stock is not producing income. Where the remaining dwellings are tenanted while they sell, that rent can service the facility instead.

Contracts fall over, and a dwelling that was counted as sold comes back into the unsold line. A residual stock facility is the usual answer, because it treats that dwelling as stock to be resold rather than as a settlement that failed. We size the facility on the stock actually held rather than on the contracts on foot, so a fall over does not put the facility out of order.

The schedule of dwellings showing what has settled, what is under contract and what is unsold. The current construction facility details and its expiry. The occupation certificate and evidence of title registration. Any recent valuation. Sales agency reports on the campaign to date. We can give you an indicative position from the schedule and the facility details alone.

Some will, on larger lines with strong settled sales and an established developer. Many will not, particularly where the remaining line is small or where the project ran past its original timetable. The non-bank and private panel is more active here and works to shorter timeframes, which is usually what the situation calls for.

They overlap and they are not identical. Development exit finance refinances a construction facility at or near completion, and can be arranged before titles register. Residual stock finance is secured against completed, titled dwellings and is designed to run while they sell down. Many projects use one and then the other.

Yes, where the value in the unsold line supports a facility above the construction debt being repaid. The difference is released to you and is commonly applied to a deposit on the next site. That is one of the main reasons developers arrange these facilities rather than simply waiting for the stock to clear.

Yes. Completed office suites, retail tenancies, industrial units and the commercial components of a mixed use building are all funded on the same basis. Where the space is tenanted the rent supports the facility and the term can usually run longer than on vacant residential stock.

Most of the time, no. Where a facility 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 development business runs, from site utilities and excavators to fit-out equipment and work vehicles. On working capital, we arrange business overdrafts, lines of credit and cash-flow funding to carry holding costs on unsold stock, to cover rates and strata levies, and to fund consultants ahead of the next project.

Yes. That is our core ethos, helping you understand the right strategy, structure and clear advice from the very first conversation. Our main borrower profiles are developers and commercial property owners seeking finance from $50,000 upwards, and the first residual stock facility usually comes at the end of a first completed project, so it is well within our wheelhouse. We will walk you through how the in one line valuation works, how release pricing is set and what term is realistic, 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.