Peer Estate is making available to you a first mortgage investment opportunity secured by a property located at 19 Abbotsford Road, Katoomba NSW 2780 (the ‘Property’).

A commercial investment loan facility of $1,560,000 (the ‘Facility’) will be provided at a Loan to Value Ratio (LVR) of 65% against the ‘as is’ market value of the property.

The proceeds of the Facility will be utilised to reimburse family members for funds used to assist with the purchase of the property which was contracted in back in December 2020 (with a 6-month settlement period) and settled in June 2021.

The Facility will have a maximum term of 24 months.

Key Deal Points

  • First Registered Mortgage over the Property
  • LVR of 65%
  • Interest Rate of 7.50% per annum to investors, net of a 0.50% per annum Peer Estate management fee, paid monthly in arrears.
  • An Interest reserve of $62,400 (equivalent to approximately six months’ interest commitments) to be held for the term of the Loan.
  • Minimum earn of twelve months.
  • Katoomba (located approximately 103 kilometres by road from the Sydney CBD and some 48 kilometres west of Penrith) sits at the foot of the Blue Mountains and is predominantly known as a tourist destination with international attractions including the Three Sisters.

PROPERTY

This Peer Estate Facility will be secured by a first registered mortgage over the subject property located at 19 Abbotsford Road, Katoomba NSW 2780. Located approximately 103 kms from Sydney, Katoomba is the main town in the Blue Mountains.

The subject property comprises a circa 1920’s-built hotel/guest house positioned on a sloping corner site with vehicular access and onsite parking. Accommodation comprises 25 guest rooms (a mix of single and double rooms) along with amenities including dining and sitting room, reception, conference room, commercial kitchen, office and caretaker room.

The property was purchased in June 2021, with the sponsor planning to operate it (after completing a renovation) as a ‘wellness retreat’ specifically for the rehabilitation of those who have received a cancer diagnosis. It is expected that clients will stay at the retreat for a minimum of two weeks and receive care, support and education.  The sponsor also expects to sub-let space to 3rd party allied health professionals (eg. counsellor, nutritionist, physiotherapist). This new business is expected to commence operations from January 2022 and to derive multiple sources of income from guest accommodation and sub-letting.

An independent valuation was completed on 27 August 2021 under instruction from Peer Estate, with the valuer estimating the ‘as is’ market value of the Property to be $2,400,000 exclusive of GST (consistent with the purchase price paid by the sponsor in June 2021).

 

SPONSOR AND BACKGROUND

The main sponsor was originally educated in economics and business management and in more recent years has completed courses in health science.

Since 2013 the sponsor and her husband together have operated a business which offers diverse services including interior design, decoration, painting, cabinet making, fencing, marketing, web design and specialised health products and services.

More recently she has started an entirely different business (at only small-scale, from her home) providing consultations to patients on their medical history, family health history and current health status to guide individualised treatment plans. The subject property was purchased to operate this business on a much larger scale.

An unlimited personal guarantee and indemnity is being provided by the sponsor and her husband.

Capital Structure Stack

  • 35.0%
    Equity $840,000.00
  • 65.0%
    Senior Debt $1,560,000.00

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 is well positioned within close proximity to the Katoomba town centre.

An independent valuation was completed on 27 August 2021 under instruction from Peer Estate with an ‘as is’ value of $2,400,000.

An LVR of 65% provides a buffer against valuation uncertainty.

 

Interest Servicing Risk

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

Mitigant

Sponsor’s existing business is established and cash generative.

However, in view of the new business venture (to be operated from the subject property) being a start-up with significant cashflow uncertainty, Peer Estate will hold an interest reserve of $62,400 (equivalent to six months interest commitments) for the term of the Facility

 

Exit Risk

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

Mitigant

The sponsor expects to refinance to a bank once the new wellness business is established at the subject property and has a track record of trading.

As a condition of the Facility, Peer Estate is to be provided with 6 monthly updates on the progress of the new business.

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