Peer Estate is making available to you a first mortgage investment opportunity secured by a residential townhouse development in Donvale, Victoria.
A construction loan facility of $3.84 million ("Facility") will be provided to assist the Borrower to acquire the site, fund finance costs associated with the Facility, and fund the construction of four detached double-storey four-bedroom townhouses with spacious living areas and double garages ("Project").
The site will be acquired with approved plans and permits for the Project allowing the Sponsor to commence demolition of the existing improvements and building works shortly after settlement.
The Facility is sized with a Loan to Value Ratio ("LVR") of 69% against the 'as if complete' GST exclusive valuation of the Project. The valuation was undertaken by an independent licenced valuer that is familiar with the locality. The Facility Loan to Cost Ratio ("LCR") will be a maximum of 75.2% against the total development cost of the Project.
Please Note: Investors will earn a Line Fee rather than an Interest Rate. Investors will be paid the Line Fee at a rate of 9.0% per annum. The Line Fee is calculated on the Facility Limit and will be paid monthly in advance.
Payments to investors will be comprised of Line Fees only, with capital to be repaid upon maturity.
The Facility has a forecast term of 14 months from the expected settlement date of 19 March 2018. A minimum earn provision will be included in the loan documents which ensures at least 9 months' of Line Fees will be earned on the transaction.
The Sponsor is a private developer and builder with a track record of acquiring sites and developing similar development projects in Melbourne's north-eastern and eastern suburbs. The Project will be undertaken as an owner-builder project. The required equity contribution of $1.265 million from the Borrower will be made upfront and in full at settlement.
The Facility does not have a requirement for any pre-sales to be achieved prior to first drawdown, however, it will require the Borrower to pre-sell at least two townhouses by 31 October 2018. Failure to achieve the required pre-sales will result in a review of the Facility, providing the Lender with a right to amend pricing, structure, terms and other conditions of the Facility.
The Facility is expected to be repaid from a combination of settlement of pre-sold townhouses and refinance of residual debt.
Investors' capital will be called upfront and in full, to be held in an account with the Lender's independent custodian (Perpetual Corporate Trust Limited) and disbursed in line with ongoing monthly construction drawdowns. Progress drawdowns will be assessed by the Lender with reference to the percentage of works complete, as certified by a qualified quantity surveyor appointed by the Lender.
The Facility will be secured by a first ranking mortgage over the property, General Security Deed from the Borrower, and Specific Security Deed over the shares in the Borrower. The Facility will also benefit from personal and corporate guarantees from the Sponsors and a builder side deed.
To see more detail regarding this investment, please return after the simple registration process.