Peer Estate is making available a first registered mortgage investment opportunity secured by a residential property at 2 Highmoor Ave, Bayswater and future development lot in Bayswater, VIC (the ‘Property’). A commercial investment loan facility of $1 million (the ‘Facility’), at a Loan to Value Ratio (LVR) of 50% will be provided against the Property. 

The borrower has a Development Approval (DA) for a 16 unit development and the purpose of the Facility is to allow the borrower sufficient time to finalise Building Permits and necessary pre-sales, engage a builder and obtain drawdown construction finance prior to repaying the Peer Estate facility.

The Facility will have a maximum term of 12 months. Pre-paid interest equivalent to 9 months will be held by Peer Estate and will be topped up by 6 months prepaid interest at 6 months.

Key Deal Points

  • Bayswater, Vic (3153) is located 27 kms east of the Melbourne CBD, and forms part of the outer eastern growth corridor.
  • The site already has the benefit of Development Approval (DA) to build 16 units
  • Interest will be prepaid for the entire facility term, with payments drawn monthly from a prepaid interest reserve.
  • LVR of 50%
  • Interest paid to investors monthly at a rate of 9.0% p.a.

PROPERTY

The security property comprises 1431 square metre development parcel with basic improvements, all services connected and a level building contour with direct street access. The property already has the benefit of a DA for 16 units as part of a three-storey development.

The site is a rectangular-shaped parcel with a 17m frontage to Highmoor Avenue.  Local shopping amenity and public transport links are close by on Mountain Highway which intersects with Highmoor Avenue 45m from the subject site.

An independent valuation was completed on 29th November 2018 under instruction from Peer Estate by Egan National Valuers. The subject property currently has an old weatherboard house with a concrete tiled roof erected on it.  The valuer describes it as being in derelict condition.  For this reason, the property was valued at land value only.

 

SPONSORS

The borrower is a new Special Purpose Vehicle (SPV) created to acquire and develop the Bayswater site. The sponsor is the sole director and shareholder of the SPV and has provided an unlimited personal guarantee and indemnity to secure the Facility.

The sponsor has successfully completed 3 investment development projects since 2016. Including the current proposed development, the sponsor has a further two (2) development projects which are already in the pipeline.

Capital Structure Stack

  • 50.0%
    Equity $1,000,000.00
  • 50.0%
    Senior Debt $1,000,000.00

RISKS

Market Valuation Risk

The risk that the Property declines in value due to changes in market conditions or property specific factors.

Mitigant

An independent valuation was completed on 29th November 2018 under instruction from Peer Estate by Egan National Valuers with a value of $2 million as land value only. Bayswater, while 27 kilometres east of Melbourne CBD, is a growing residential suburb with a developing profile. As with nearby Boronia, and Wantirna to the east, Bayswater is undergoing a rejuvenation and transformation in character from low- to medium-density residential, with many unit and townhouse developments under construction and planned for the Knox district.

The Lender has set Conditions subsequent to the loan to ensure preservation of the development and planning approval attached to the property.

The proposed development site is well-positioned on Highmoor Avenue, linking directly to main arterial Mountain Highway offering direct links to the M3 Eastlink toll road. It is close to Bayswater Train Station being a short walk and the local shopping precinct forming part of the immediate surrounds of the subject site.

Exit Risk

The risk that the borrower is unable to repay the Facility at maturity

Mitigant

The facility will be fully repaid by way of refinance into development finance. The sponsor has approached two major banks and both have expressed interest in the development in its current form. The site, as approved, has a yield of 16 units and based on an average sale per unit of $525,000 will have a substantial realisation of $8.4 million.

Alternatively, given the low 50% LVR including prepaid interest, $1,000,000 net sale proceeds from a 1,413sqm block with planning permits would appear achievable. 

Project Questions

No questions have been asked.

Peer Estate, an authorised representative under the Qualitas Securities P/L A.S.F.L. 342242