Renounceable Sale Contracts
Prudential Finance can arrange for developers a service whereby standby presales (put options) on new residential projects are arranged to a sufficient level to enable financing to take place (complying with Bank presale requirements).
The facility is a standby facility and the presales (Put Options) are arranged at a discount to the market/list price.
The developer does not intend to sell the unit to the “standby purchaser” as the developer aims to sell the units at the list price to the normal market over the construction period. However by arranging these “standby presales” (put options), at a discount, there is usually sufficient sale value to cover Bank debt. This gives the Bank comfort that, in need (say 6 months after the completion of the project), it can call up these standby sales to repay the debt if the developer has not sold or refinanced the remaining apartments.