Case Study
Residual Stock Finance to Clear a Completed Townhouse Project
A developer completed a small townhouse project in Geelong, but sales were slower than forecast, leaving the original development facility mismatched against the smaller pool of remaining stock.
Illustrative commercial finance scenariosAI-supported lender matchingBroker-reviewed funding strategyCommercial finance support across Australia
Illustrative commercial finance scenariosAI-supported lender matchingBroker-reviewed funding strategyCommercial finance support across Australia
Case study facts
Public facts used to assess lender fit
Some commercial details are intentionally anonymised. The public facts below show the assessment logic without exposing private borrower information.
Location
Geelong, VIC
Scenario
Completed townhouse project with unsold stock
Structure
Residual stock finance
Key test
Current value and sales evidence on remaining stock
Public amount
Not publicly disclosed
Exit
Sell down remaining townhouses
The situation
Construction was finished, but sales had not kept pace with the original feasibility
Development finance is usually structured around a feasibility that includes an expected sales rate. When sales run behind that forecast after completion, the original facility can be a poor fit for what is left: a smaller number of completed, unsold properties rather than an active construction project.
In this scenario, the developer needed a facility sized and structured around the remaining stock, not the original project scope.
What we considered
Factors that shaped the lender conversation
Stock position
Sale evidence and valuation on remaining stock
Current valuations and any sale or offer evidence on the unsold townhouses, used to size a facility against what was actually left.
Cost pressure
Holding costs vs facility term
The ongoing holding costs of unsold stock, weighed against how long a residual stock facility would run before the exit.
Exit
How the new facility repays the development loan
The sequence for using the residual stock facility to repay or refinance the original development loan as sales completed.
Why it mattered
Residual stock finance is a bridge between built and sold, used deliberately
A completed project with unsold stock is a different risk profile to an active construction project. Residual stock finance exists to bridge that gap, but it works best when it is sized honestly against realistic sale timing, not treated as a way to avoid addressing a slower sales market.
The broker-reviewed step here was matching the facility size and term to a realistic sales timeline, rather than the developer's original forecast.
Borrower lessons
What similar borrowers should take from this scenario
These points are not approval criteria. They show the practical information that usually helps a broker narrow lender fit before a formal credit process starts, and what a borrower or referrer can prepare before asking a lender to assess the file.
Revalue the position
Completed stock should be assessed on current evidence
Current valuations, recent sales, offers, and market feedback matter more than the original feasibility once the project is finished.
Model holding costs
The term needs to match realistic sell-down timing
Residual stock finance should allow enough time for sales while recognising interest, rates, body corporate costs, and other holding expenses.
Keep the exit honest
A slower market changes the facility conversation
If stock is taking longer to sell, the lender path should be built around the actual sales environment rather than the original sales forecast.
FAQ
Questions about this type of scenario
What is residual stock finance?
Finance sized against completed, unsold stock from a development project, typically used to repay or replace the original construction facility once building is finished.
When does a completed development need residual stock funding?
When sales have not kept pace with the original feasibility by the time construction finishes, leaving unsold stock against a facility structured for an active build.
How do lenders assess unsold completed stock?
Usually through current valuations, any sale or offer evidence, holding costs, and a realistic view of how quickly the remaining stock is likely to sell.
How can residual stock funding help repay a development facility?
It replaces the construction-stage facility with one sized for the completion stage, giving the developer time to sell remaining stock without the pressure of the original build-phase loan terms.
What are the risks of using short-term funding against residual stock?
If sales remain slower than expected, holding costs and facility costs continue to accrue. A realistic sales timeline and exit plan should be assessed before the facility is arranged.
Disclaimer
Finance is subject to lender approval. Terms, fees, rates and eligibility vary by lender and borrower circumstances. AI-supported lender matching does not guarantee approval. Balmoral reviews scenarios through a commercial finance broker before recommending a funding pathway.
This case study describes an illustrative commercial finance scenario based on common borrower situations. It is general information only, not a guarantee of approval, pricing, timing, or outcome for any other borrower or property.