Loan in Spotlight: Northgate, QLD

Trilogy Funds expands its support of Sponsor in second stage of industrial development at Northgate in Brisbane.

Project overview

After the successful financing of Stage 1 at Northgate, Trilogy Funds was pleased to assist the Sponsor progress the second stage of its adjoining industrial development via a tailored construction facility.

Trilogy Funds worked closely with the Sponsor to restructure the security position and deliver the second, standalone facility for the adjoining site. This allowed both projects to be delivered in parallel and ultimately de-risked the entire project through a staged selldown.

This facility supports the development of two premium 478 sqm industrial units. Each unit will consist of high-clearance warehouse space with mezzanine office / storage, a premium internal fitout that targets owner-occupiers, as well as onsite parking and hardstand areas.

The site benefits from its position within Northgate’s tightly held inner city industrial precinct that is approximately 9 kilometres from the Brisbane CBD and 6 kilometres from Brisbane Airport.

The repeat Sponsor has a proven track record in the area and has consistently sold stock prior to or shortly after completion.

Why Trilogy Funds was the preferred partner

Trilogy Funds was selected as the preferred financing partner for a number of reasons.

1. Continued support across multiple stages of the same project

Trilogy Funds initially supported the Sponsor through the first stage of the project, providing the capital required to commence construction.

For the second stage, Trilogy Funds:

• Retained and leveraged cross-collateral security across both sites;
• Transitioned the land for Stage 2 from collateral into a standalone construction loan; and
• Provided continuity of funding without requiring refinancing to a new lender.

This allowed the Sponsor to treat the project as a coordinated multi-stage development, rather than two disconnected transactions.

2. Flexibility to stage delivery and de-risk progressively

The funding structure enabled parallel delivery of adjoining sites and staged selldown of completed stock across the first stage, which will result in a progressive reduction in leverage.

This approach reduces overall risk exposure, improves security position during the loan term and allows the Sponsor to recycle capital efficiently into Stage 2.

3. Funding aligned to an owner-occupier sales strategy

Unlike traditional lenders requiring presales, Trilogy Funds recognised that the target market is owner-occupiers who typically transact near completion and that product quality and fitout are critical to sales outcomes.

As such, the facility was structured given the Sponsor’s demonstrated ability to execute in the Northgate market, underpinned by a proven track record of delivering and successfully selling similar product to owner-occupiers, having completed four similar projects in this market. This allows the Sponsor to maintain price discipline, showcase completed product prior to sale and maximise end values in a supply-constrained market.

4. Support for an integrated builder-developer model

The Sponsor operates both development and construction businesses, allowing Trilogy Funds to:

• Underwrite the owner-builder delivery model;
• Recognise strong cost control and delivery capability; and
• Structure conditions to reflect proven in-house execution.

This avoided the need for a third-party builder and provided the Sponsor with greater flexibility and margin control.

Clear and structured exit strategy

The primary exit strategy is the sale of both industrial units following completion. Based on valuation and pricing assumptions, the sale of both units is expected to fully repay the facility.

However, additional risk mitigants include profit realisation from Stage 1 and the ability to lease and refinance the completed units if required.

Trilogy Funds supports multi-stage development projects

From initial acquisition through to staged development and selldown, Trilogy Funds partners with experienced sponsors to deliver flexible, scalable funding solutions across the full project lifecycle.

Request an indicative offer at https://trilogyfunds.com.au/financing/.

Settled by Jack Mihaljovic.

This article has been prepared by Trilogy Funds Management Limited (Trilogy Funds) ABN 59 080 383 679 AFSL 261425 for existing and prospective borrowers and brokers and provides information only about Trilogy Funds’ lending services. Trilogy Funds is not a licensed credit provider and does not make loans regulated by the National Credit Code. The source of Trilogy Funds’ loans may include managed investments schemes registered with ASIC, as well as other private lending arrangements. If you would like more details on our lending services, please contact us.