Peer Estate is making available to you a first registered mortgage investment opportunity secured by two properties, located in Queenscliff VIC 3225 and Leopold VIC 3224 respectively (the ‘Properties’).

A commercial investment loan facility of $721,000 (the 'Facility') at an overall Loan to Value Ratio ('LVR') of 45% calculated against the value of the security properties.

The proceeds of the Facility will be primarily utilised to assist with costs relating to the redevelopment of a separate property held by a related entity.

The facility will have a maximum term of 12 months.

Key Deal Points

  • First Registered Mortgage over 2 security properties
  • LVR of 45%
  • Interest Rate of 10.00% per annum to investors, net of a 0.50% per annum Peer Estate management fee, paid monthly in arrears.
  • Minimum earn of six months.
  • Interest for the 12-month term of the facility to be prepaid.
  • The security properties are located approximately 13kms and 27kms southeast of Geelong.

PROPERTY

This Peer Estate Facility will be secured by first registered mortgages over a retail shop located at 70 Hesse Street, Queenscliff VIC 3225 and the sponsors’ primary residence located in Leopold VIC 3224. 

Property 1

This two-storey property (comprising ground floor shop and upstairs residence) is located in the main retail strip of Queenscliff. The rectangular shaped allotment of 313 square metres is located approximately 27kms southeast of Geelong.

The ground floor of the building includes a retail trading area, storeroom, display room and a staff room with laundry. The first-floor residence includes two bedrooms and a third single bedroom/study, together with a fully equipped kitchen and bathroom. The residence is accessible via an external steel staircase as well as internally from the retail shop.

The property is tenanted, with the current lease having commenced in September 2014 and scheduled to expire in September 2021, although the tenant has an option to renew for a further five-year term.  

An independent valuation was completed on 23rd January 2020 under instruction from Peer Estate within which the valuer estimates the market value of this property at $1,030,000.

Property 2

This property is the sponsors’ primary place of residence. Located in Leopold VIC, the improvements include four bedrooms, 2 bathrooms, double garage, rumpus room with built in bar, a lounge room, dining room and a workshop.

The property is situated on a 755 square metre block and is owned by the sponsors in their individual names.

The estimated value of the residential property is $600,000.  Whilst Peer Estate has not instructed a formal valuation of this secondary security property, the estimate is considered reasonable for the type of property and the location.  

 

SPONSOR AND BACKGROUND

The Sponsors are a husband and wife team who are both retired, having previously owned and managed a number of ‘fish and chip’ shops across the greater Geelong area. They are well asset-backed holding a number of properties through trusts and in their personal names.

Personal guarantees will be provided by both sponsors.

Capital Structure Stack

  • 55.8%
    Equity $909,000.00
  • 44.2%
    Senior Debt $721,000.00

RISKS

Valuation Risk

The risk that the security properties decline in value due to changes in market conditions or property specific factors.

Mitigant

The retail shop has been tenanted by the same tenant for the past 6 years and is situated within a tightly held retail strip in Queenscliff. The valuer’s comments confirm no current vacancies within Hesse Street and most tenancies are long-term.

The estimated market value of the sponsors’ residential property of $600,000 is considered reasonable by comparison to market data for the location.

 

Interest Servicing Risk

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

Mitigant

Peer Estate has completed its standard due diligence to assess the borrower’s ability to meet their servicing obligations noting both the sponsors are retired and reliant on rental income.

Furthermore, interest for the full 12-month term of the facility will be prepaid.

 

Exit Risk

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

Mitigant

The Facility is expected to be repaid via refinance to a traditional ‘bank’ lender once the current disruption to the financial markets has subsided.

Alternatively, one or both of the security properties could be sold in order to repay the Facility.

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