Peer Estate is making available to you a first mortgage investment opportunity secured by a property located at 3-9 Wroxton Street, Midland WA 6056 (the ‘Property’).

A commercial investment loan of $3,300,000 (the ‘Loan’) will be provided at a Loan to Value Ratio (LVR) of 55% measured against the estimated market value of the Property. 

The proceeds of the Loan will refinance an existing private lender loan and thereby provide further time for a proposed development of the Property to be further progressed to a construction-ready stage. 

The Facility will have a maximum term of 15 months.

Key Deal Points

- First Registered Mortgage over the Property.

- The Property comprises a large vacant plot in Midland, which is a residential suburb situated approximately 16 kilometres northeast of the Perth CBD

- LVR of 55% measured against the estimated market value of the Property

- Variable Interest Rate calculated as (Peer Estate base interest rate* plus 7.00% per annum) to investors, net of a 1.20% per annum Peer Estate management fee, paid monthly in arrears to investors

- Interest will be prepaid by the Borrower, initially to cover a period of (approximately) 12 months. At 9 months from loan drawdown, the Borrower will be required to top up the (then remaining) interest reserve balance to a level sufficient (based on the then prevailing interest rate) to cover the remaining 6month term of the Loan.  

* Peer Estate base interest rate is a rate determined by Peer Estate by reference to the 90-day bank bill rate on the first business day of each month (expressed as a percentage rate per annum and rounded up to one decimal place)

PROPERTY

This Loan will be secured by a first registered mortgage over the Property, located at 3-9 Wroxton Street, Midland WA 6056. Midland is a residential suburb in the Perth metropolitan region, located approximately 16 kilometres from the city centre.

The Property is a large vacant lot comprised by four adjoining lots/titles. Each lot is approximately 1,012 square metres and thereby the total area of the Property is 4,048 square metres.

The sponsors intend to develop the site to provide up to 97 apartments in a 4-5 storey resort-style complex. Development Approval “DA” from the local council was granted for this in 2020 and in acknowledgement of the COVID pandemic the expiry of this DA has automatically been extended by 2 years (now expiring in 2024).

More recently, the sponsors have obtained advice that reconfiguring the proposed development for use as disability accommodation (37 of the 97 apartments for Specialist Disability Accommodation and balance for Supported Independent Living) might achieve a much higher return.

The Peer Estate loan will be utilised to refinance the borrowers’ existing loan and provide further time for the proposed development of the Property to be further progressed to a construction ready stage. 

An independent valuation of the Property was completed on 6 June 2022 with the valuer estimating the market value of the Property to be $6,000,000 exclusive of GST.

 

SPONSOR AND BACKGROUND

The borrower is a Special Purpose Vehicle (SPV) which was established to hold the debt secured by the Property

The sponsors are siblings who some years ago inherited two of the titles and subsequently purchased the other two.  The sponsors are not experienced property developers however have engaged third-party consultants for planning and construction planning purposes.

Unlimited guarantees and indemnities are being provided by each of the sponsors personally.

Capital Structure Stack

  • 45.0%
    Equity $2,700,000.00
  • 55.0%
    Senior Debt $3,300,000.00

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 of the Property was completed on 6 June 2022 with the valuer estimating the total value of the Property to be $6,000,000 exclusive of GST.

The Property has good locational attributes and the benefit of development approval.  

An LVR of 55% provides acceptable buffer against valuation uncertainty.

 

Interest Servicing Risk

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

Mitigants

Interest will be prepaid, initially to cover a period of (approximately) 12 months and is to be topped up by the Borrower at 9months (from loan drawdown) to cover the remaining 6month term of the Loan.

 

Exit Risk

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

Mitigant

Repayment of the Peer Estate loan by the end of the 15 month term is expected to come from either:

a) Refinance to a construction facility, or

b) A sale, by the sponsors of the Proper

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