Equity funding for AFG Corp Developments’ projects is sourced from AFG Corp Capital which is the funding entity in the AFG Corp group. AFG Corp Capital has historically also provided financing to other third party development projects.
AFG Corp Developments funds its development involvements by borrowing the majority of the funding requirement (generally from a major bank), and contributing the balance as equity from AFG Corp Capital’s cash reserves. Where bank funding is sourced, a first mortgage is offered over the development project property.
Aware that property investors with cash on deposit awaiting completion and settlement of property investments receive limited return on their deposit monies, AFG Corp Capital also has an arrangement where it formally borrows these funds and on-lends them to AFG Corp Developments for use in development projects. This reflects the opportunity for property investors to lend to AFG Corp Capital for relatively short periods and receive a higher return.
AFG Corp Capital lends capital to AFG Corp Developments which then lends capital and external debt funding to the projects. AFG Corp Capital receives an interest return on funds lent to AFG Corp Developments. All AFG Corp Developments projects are individually accounted for and an interest charge is levied monthly on each project based on funds employed. This enables AFG Corp Developments to accurately determine and include a project financing cost in project profitability assessments completed for all projects, and necessary for joint venture project accounting.