A healthcare development structured to de-risk the build

Ground-up development usually comes with a long list of things a lender wants resolved before the first dollar is drawn. This Upper Hutt healthcare project has been structured so most of them are.

The Upper Hutt Health Hub is a purpose-built, three-storey healthcare facility of around 3,000m² in the Upper Hutt CBD. Medispace is seeking a $15–17 million senior development facility to bring it through construction and stabilisation.

The key is what happens before drawdown.

The sponsor is committing around $1 million of its own capital to progress the project through consents, design, leasing and the land agreement. The target is to reach financial close with at least 50% of the building pre-let, a fixed-price construction contract in place, and the project ready to build.

The land structure also changes the funding equation. Upper Hutt City Council is proposing to sell the site under a deferred-settlement agreement, with payment due at practical completion rather than during construction.

That means the development facility is focused on delivering the building, not funding the land.

The proposed take-out is straightforward: refinance with a New Zealand trading bank once the project reaches practical completion and stabilises.

What makes the opportunity compelling?

✓ $15–17 million senior development facility sought
✓ Around $1 million of sponsor equity committed before drawdown
✓ At least 50% pre-let targeted at financial close
✓ Deferred land settlement until practical completion
✓ Bank refinance targeted as the exit

There is still work to do. The land agreement, tenant leases and construction tender all need to be converted into executed documents.

But the structure is designed to get those pieces in place before senior capital is exposed.

For development finance, that matters.