Light House Investment Partners

Capital Arrangement

Our Capital Solutions

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Senior Debt & Stretch Debt
We arrange Senior Debt and Stretch Senior Debt facilitiesfor Land acquisition, Development financing, residual stock financing and Investment Debt scenarios. We can arrange Senior Debt and Senior Stretch Debt facilities ranging from as low as $1m and as high as $350m+ for large projects. The security arrangement for a Senior Debt or Stretch Senior Debt facility is a Registered 1st mortgage on the security property/ies involved.

A Stretch Senior Debt facility represents higher gearing (Loan to Value ratio) than what a typical Senior Debt facility would achieveand is priced higher to reflect the greater risk.
Depending on the case, a Senior Stretch facility might be a superior alternative to combining a Senior Debt facility with a separate Mezzanine debt facility because the Borrower has:

  • Greater pricing certainty with a single set of pricing

  • Improved risk management, with a single facility and/or a single Financier

  • Greater flexibility

  • Improved Return on Equity for the Borrower, due to being able to borrow more and deploy less equity

Example pricing across various tiers of gearing for Senior Debt or Stretch Senior Debt arrangements can be:
Land Acquisition Typical Gearing (LVR) Range Example Pricing Range (Interest rate p.a only)
Senior Debt
Major Bank
45% to 55%
5.75%- 6.85%
Non-Bank Financiers
40% to 50%
8.25%- 9.00%
50% to 60%
9.00%-10.50%
60% to 65%
10.50%-13.50%
Senior Stretch Debt
Non-Bank Financiers
65% to 75%
10.50%-14.00% p.a
Development Finance Typical Gearing Range Example Pricing Range
Major Bank
Line Fee
Interest Rate
Senior Debt
Up to 60%
1.50%-1.85%
2.50%-3.50%
60% to 65%
1.50%-1.85%
2.75%-3.65%
Non-Bank Financiers
Up to 60%
1.50%- 2.75%
7.50%- 9.50%
60% to 70%
2.00%-3.50%
7.50%-10.50%
Senior Stretch Debt
Non-Bank Financiers
65% to 75%
2.00%-3.50%
8.50%- 11.50%
The above example pricing is provided for illustration purposes only and does not necessarily represent all the components that an end to end pricing structure may entail (e.g. Lender Establishment Fee, Brokerage fees etc).
Mezzanine / Subordinated Debt
Subordinated or Mezzanine debt entails a separate debt facility that ranks behind in priority to a Senior Debt facility. It is meant to address the gap between Senior Debt and traditional Equity contribution from the Borrower.

A Subordinated debt facility will typically take a Registered 2d mortgage on the security property/ies involved in the transaction.
By delivering borrowing capacity as high as 80% LVR, a Subordinated debt arrangement can delivery significant strategic and financial value to a property developer / investor:

  • Greater Return on Equity / Return on investment, by substituting equity capital with relatively cheaper debt

  • More efficient usage of Sponsor’s equity capital, with the Borrower needing to deploy less equity than would be the case without the Mezzanine debt arrangement

  • Improved diversification by being able to spread cash reserves across a wider range of projects

We are able to structure Subordinated debt arrangements to suite a wide range of project needs. Contrary to popular opinion, Subordinated debt doesn’t have to be prohibitively expensive. For the right ventures and Sponsors, we can achieve pricing as low as 13.00% p.a.

Used effectively, Subordinated debt can be a real strategic enabler for the venture.
Preferential Equity and Equity
A common pain-point for many developers and investors relates to having inadequate quantum of equity contribution within a transaction. This can often make or break a transaction in terms of achieving the entire range of financing required.

Lighthouse Investment Partners is able to add tremendous value by structuring fresh injection of equity capital (either as Common Equity or Preferential Equity) into the transaction from our range of investors and capital partners.
Our Equity solutions bring strong value to the table:

  • Flexible pricing – fixed yield, share of profits and/or a hybrid

  • Flexible security structures – shareholding in project entity, unregistered mortgage over security property etc

  • Meeting bespoke capital structure requirements – e.g. where it is not possible to include a Subordinated Debt facility

  • Amplifying the Equity Internal Rate of Return (IRR) for the project Sponsor, by way of competitive pricing that can sometimes be less than the Return on Equity a Sponsor expects to derive from their equity contribution

  • More efficient usage of Sponsor’s equity capital, with needing to deploy less equity than would be the case without the bespoke Equity investment arrangement

  • Improved diversification by being able to spread cash reserves across a wider range of projects

For the right transactions we can achieve Equity contributions representing a relativity of 2x or even 3x of equity contribution from the Sponsor. For e.g., if Sponsor has deployed $5m of equity, our Equity investment facility can contribute as high as $15m Pricing can vary, with fixed yields as low as 18% p.a for transactions with superior credentials.

We can arrange Equity investment facilities for as low as $500,000 for small / boutique projects and as high as $50 million-$100 million for transactions entailing a cost profile of $400m to $800m+.
Leveraged Finance Solutions
An area in which Lighthouse Investment Partners excels, relates to arranging bespoke leveraged finance solutions.
With a wide array of capital partners, we are able to structure a capital stack that achieves multiple objectives for the sponsor:

  • Minimal cash equity deployment – sometimes no more than 4%-6% of Total Development Costs

  • Maximize Return on Equity (RoE) for Sponsor

  • Spread balance sheet across multiple projects – risk diversification

  • Strategic capital relationships – enables scale and growth

We can enable a variety of capital stack outcomes, involving Senior Debt or Senor Stretch Debt along with Mezzanine Debt as well as Equity injection (Preferential Equity / Common Equity).

Depending on the transaction, we may enable an external an end2end financing structure that represents gearing of 90%-93% Loan to Value Ratio, or up to approx. 95% Loan to Cost Ratio (% of Total Development Costs).
Some example capital stack structures we have successfully achieved for clients include:
Integrated Acquisition & Development Finance
We take the uncertainty out of the equation for development site acquisition and project financing by providing an Integrated Acquisition & Development Finance solution.
In this scenario, we will lock in the end2end financing pathway upfront at the beginning of the cycle (point of land acquisition). This will include:

  • Land acquisition financing (incl provision of ongoing costs to secure permits etc)

  • Conditionally approved Development financing facility – with well-defined parameters and conditions to achieve

  • Top-ups or incremental injection of capital via Mezzanine Debt and/or Equity investment arrangements, as needed

Through the above approach, we enable significant certainty on project financing, thereby significantly enhancing the acquisition component of the transaction journey.
We can add further value by:

  • Bringing a development site to the table with a pre-arranged end2end financing pathway in place

  • Bringing JV partners and/or Exit solutions to the table

Risk Management & Take-out Solutions
We pride ourselves on delivering tremendous tangential value to our clients by offering a suite of strategic components:

Builder JVs / Self-funded Construction contracts

We bring an established Builder to the project who will provide equity capital contribution or even self-fund part of the construction

Exit / takeout Solutions

  • Forward Purchase or Lease: We can lock in an Exit solution by way of a forward purchase or lease of the end product
  • Integrated forward-lease and forward-purchase arrangements: Entailing a forward-lease by an operator and a forward-purchase by a different counterparty on premise of the forward-lease being locked in
  • Put/Call options: An underwritten solution giving the Developer the right (but not the obligation) to trigger the purchase of the end product for a pre-agreed sum. This type of arrangement will typically entail a sale price at a discount to valuation and an Option fee/premium,

Fund Through Arrangements

This entails a complete development financing solution by the same counterparty that has also undertaken to forward purchase the end product

Operational JVs / Management Agreements

By facilitating arrangements to lock in suitably qualified operators and service providers upfront in a project, we enable material de-risking.

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