Peer Estate is making available to you a first mortgage investment opportunity secured by a property located at 176a Ellesmere Road, Gymea Bay NSW 2227 (the ‘Property’).

A commercial investment loan facility of $1,150,000 (the ‘Facility’), at a maximum Loan to Value Ratio (LVR) of 57.50% will be provided against the ‘as is’ market value of the property.

The proceeds of the Facility will be utilised primarily to refinance the Borrower’s existing loan from a private lender and so provide additional time to secure Development Approval (“DA”) to subdivide the property into two separately titled lots.

The Facility will have a maximum term of 18 months.

All investor funds committed for investment in this Facility are required to be available as cleared funds in the Peer Estate Finance account by no later than close of business on Wednesday 2nd June. Any committed amounts not received or not clear will lead to the investor allocation being cancelled and the investment being reopened for investment. This Facility is scheduled for settlement on Thursday 3rd June and interest earn on all investor funding will commence as of this date.

Key Deal Points

  • First Registered Mortgage over the Property
  • LVR of 57.50%
  • Interest Rate of 7.50% per annum to investors, net of a 0.50% per annum Peer Estate management fee, paid monthly in arrears.
  • Interest for the 18-month term of the facility to be prepaid.
  • Gymea Bay is a residential suburb located approximately 27 kilometres south of the Sydney CBD, with water frontages to the south and east.
  • The property itself is a vacant steeply sloping lot with waterfrontage to Gymea Bay

PROPERTY

This Peer Estate Facility will be secured by a first registered mortgage over the subject property located at 176a Ellesmere Road, Gymea Bay NSW 2227.

The suburb of Gymea Bay is situated approximately 27 kilometres south of the Sydney Central Business District. Gymea Bay is primarily a residential suburb within Sutherland Shire which offers waterfrontages to the south and east, towards parts of Port Hacking.

The security property is a vacant allotment of 3,557 sqm which is steeply sloping and reached via the terminus of a Right of Way shared by multiple properties. The property is thickly timbered including mature trees, fallen logs and includes rocky outcrops. Beyond the waterfrontage and occupied under terms of a Maritime Lease, a reclaimed land portion is improved with a dated boatshed in neglected condition.

The property has been owned by the sponsors for approximately ten years. DA approval to subdivide the single lot into three separate lots was approved in 2013 and a parcel (now known as 198 Ellesmere Road, Gymea Bay) was sold in 2017.

The subdivision of the remaining parcel into two lots was subject to consent from neighbours around boundary realignment and right of access via the existing carriageway which is also used by neighbouring properties. The owner of a neighbouring property was paid to permit access however later objected and refused to provide consent. The matter went through a 6-year legal battle which the sponsors ultimately won.

However, during this time the original DA lapsed and a fresh application was submitted in August 2019. Due to some errors in processing and further delays caused by the COVID-19 pandemic the matter has not yet concluded.

An independent valuation was completed on 29 March 2021 under instruction from Peer Estate, with the valuer estimating the ‘as is’ market value of the Property to be $2,000,000 exclusive of GST.

 

SPONSOR AND BACKGROUND

The main sponsor is a qualified builder, civil engineer and developer. In recent years he has moved into semi-retirement after recovery from illness.  His wife (a teacher who remains working) is our second sponsor.

An unlimited guarantee and indemnity is being provided by each of the sponsors personally.

Capital Structure Stack

  • 42.5%
    Equity $850,000.00
  • 57.5%
    Senior Debt $1,150,000.00

RISKS

Market Valuation Risk

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

Mitigant

The property comprises a large landholding with Gymea Bay frontage.

An independent valuation was completed on 29 March 2021 under instruction from Peer Estate with an ‘as is’ value of $2,000,000.

An LVR of 57.50% provides a buffer against demand and valuation uncertainty given the unique nature of the property.

 

Interest Servicing Risk

The risk that the borrower is unable to meet interest commitments on the Facility

Mitigant

Interest for the full 18-month term of the loan will be prepaid.

 

Exit Risk

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

Mitigant

Assuming DA approval is received the sponsors plan to subdivide the property into two separately titled lots and sell each lot individually.

However, if DA is not forthcoming then the sponsors will look to sell the property ‘as is’ or alternately may seek to refinance the loan to another private lender.

The borrower is required to by no later than 15months from drawdown (3months prior to loan maturity date) provide Peer Estate with evidence of a contracted sale of the property or evidence of a formal letter of offer of refinance sufficient to repay the current Peer Estate loan facility in full. 

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