How I Underwrote a $71M Residential Build in Australia

I underwrote a $71M residential building in Australia.

The sponsor's last build: 10 floors in 21 days.

- 91 units, 3.5km from Brisbane CBD
- $50M construction debt at 70% LVR
- Sponsor equity $21M to complete the stack
- 20-month build, targeted completion February 2028
- Modular prefab builder (first of its kind in Australia)
- Brisbane 2032 Olympics is the macro tailwind

Land is bought, pilings are in the ground, and a revised DA is being pursued to increase height and improve the unit mix before construction.

To fund deals like this, I ask 4 questions:

1) What stage of risk are we in?

- Land owned, pilings completed
- Original DA approved, improved DA under review
- Construction is pending revised approval
- Pre-sales position not disclosed

2) What makes the location work?

- Woolloongabba is the Olympic precinct for 2032
- Construction costs make new supply constrained
- Walking distance to two large hospitals

3) How is the downside protected?

- Sponsor owns the land
- 70% LVR on debt limits lender exposure

There's no mention of pre-sales, which most construction lenders would require before releasing funds on a $50M facility.

4) Can we control the exit?

- Unit-by-unit sales on completion
- 91 units across a range of price points
- No single buyer needed to exit clean

This deal needs more de-risking before it's lender-ready. Two tier-1 lenders have already passed. One flagged the sponsor's balance sheet as too thin; the other said the loan is too large. No pre-sales.

My verdict:

- Weak fit for Private Credit
- Weak fit for Institutions
- Medium fit for Family Offices
- Medium fit for UHNW Retail Investors

If you allocate to real assets, let's connect 👋