When projects become difficult, the lender often determines whether they finish.
Property development rarely follows a straight line. Planning delays, rising construction costs, builder insolvencies and changing market conditions have become familiar challenges across the industry.
Recently, TierONE Capital funded the completion of a multi-level residential apartment development that had already experienced three separate builder failures before our involvement. Previous builders had entered administration both before and during the COVID period, leaving the project partially completed and facing significant uncertainty.
Many lenders would have viewed the history alone as sufficient reason to decline the opportunity.
We viewed it differently.
Rather than focusing solely on the project’s past, we assessed whether there was a realistic pathway to successfully complete the development.
Looking Beyond the Cost to Complete
Completing a partially constructed development requires considerably more than funding the remaining building works.
Before committing to the transaction, our Property Services Team undertook a comprehensive review of the project to determine everything required to achieve practical completion.
This extended beyond estimating construction costs. The assessment considered the broader development requirements necessary to ensure the project could be completed, remain compliant with regulatory requirements and ultimately be delivered to market in a saleable condition.
That level of technical assessment provided confidence that both the borrower and lender understood exactly what remained to be done before funding commenced.
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“The difference between funding construction and delivering a completed project is understanding everything that sits around the build itself. Our Property Services Team works alongside borrowers to identify those risks early and manage them throughout the life of the project.” Wayne McGregor, Executive Manager, Origination |
A Collaborative Approach
Successful development finance is rarely achieved by the lender alone.
In this case, an experienced and committed borrower worked collaboratively with our lending and Property Services teams to overcome the challenges inherited from previous builders.
Regular project oversight, disciplined funding controls and ongoing communication enabled the development to progress as planned.
The project ultimately reached completion within the forecast timeframe and budget established when TierONE Capital entered the transaction.
Following completion, we continued supporting the borrower by providing two Residual Stock Loan facilities, allowing completed apartments to be sold progressively rather than under unnecessary time pressure.
Today, the development is virtually sold out.
Confidence Matters
Stepping into a project on its fourth builder is not a decision made lightly.
It requires confidence in the borrower, confidence in the development strategy and confidence in the lender’s ability to actively manage construction risk.
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“The difference between funding construction and delivering a completed project is understanding everything that sits around the build itself. Our Property Services Team works alongside borrowers to identify those risks early and manage them throughout the life of the project.” Wayne McGregor, Executive Manager, Origination |
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Experience That Extends Beyond Settlement
Private lending isn’t simply about providing capital.
It’s about understanding property development, recognising where value can still be created and working collaboratively with borrowers and referrers to deliver successful outcomes.
At TierONE Capital, our experience spans land banking, construction finance, completed property and residual stock facilities, enabling us to support projects throughout their lifecycle.
If you have a development that requires practical, commercial thinking rather than a standard credit assessment, we’d welcome the opportunity to discuss it.
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