Peer Estate is making available to you a first registered mortgage investment opportunity secured by a property located at 78 Mustang Drive, Sanctuary Point, NSW 2540 (the ‘Property).

A commercial loan facility of $350,000 (the 'Facility) at an overall Loan to Value Ratio ('LVR') of 58.3% calculated against the value of the security property.

The proceeds of the Facility will be utilised to refinance (and consolidate an existing mortgage together with a variety of small business loans) into a single loan Facility from Peer Estate.

The Facility will have a maximum term of 12 months.

Key Deal Points

  • First Registered Mortgage over the Property
  • LVR of 58.3%
  • Interest Rate of 9.00% per annum to investors, net of a 1.25% per annum Peer Estate management fee, paid monthly in arrears.
  • Minimum earn of nine months.
  • Peer Estate will hold an interest reserve of $17,938 (equivalent to six months interest commitments) for the term of the Facility  

PROPERTY

This Peer Estate Facility will be secured by a first registered mortgage over the sponsors’ primary place of residence located in Sanctuary Point, NSW. Situated on the south coast of NSW, Sanctuary Point is an established town lying approximately 30kms south of Nowra and 190kms south of Sydney.

The property (owned by one of the sponsors in their personal name) comprises a 556 square metre block, improved by a dwelling with four bedrooms, dining, living, games/rumpus, kitchen, front porch, rear patio, and double garage. The valuer advises that the improvements are currently in good to very good condition and include good quality fixtures and fittings throughout.

An independent valuation was completed on 16 November 2020 under instruction from Peer Estate, with the valuer estimating the market value of the Property to be $600,000, exclusive of GST.

 

SPONSOR AND BACKGROUND

The sponsors are a husband and wife team who own and operate a primarily intrastate transport business. The female sponsor oversees the accounts and administration for the group while the male sponsor operates the vehicles. This business is being operated from a leased premises in South Nowra.

The sponsors have operated the business for the past ten years however for only 2 years in its current form. The business was restructured in 2017/2018 after single debtor reliance coupled with weak trading led to the winding up of their former trading entity. A liquidator was appointed who sold all the business assets of the former entity to the new trading entity. The liquidation process was finalised in late 2018 however it must be noted that no secured creditor lost any money in this liquidation process, as all such secured debts were transferred (along with the business assets) to the new trading entity. The business is still significantly reliant on its largest customer (which represented 71% of FY20 revenue), however, continues to focus on diversifying its client base so to reduce this risk.

Personal guarantees will be provided by both sponsors.

 

Capital Structure Stack

  • 41.7%
    Equity $250,000.00
  • 58.3%
    Senior Debt $350,000.00

RISKS

Valuation Risk

Potential that the current market value ascribed by the valuer deteriorates

Mitigant

The property is a standard residential home and valuer remarks that the property is 10 years old and in good/very good condition.

LVR of 58.3% provides a good buffer to potential market decline.

 

Interest Servicing Risk

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

Mitigant

The cashflows of the operating business are expected to be sufficient to service interest on the new Peer Estate loan, however, to provide additional comfort Peer Estate will hold an interest reserve equivalent to 6 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

Subject to continued improvement in the performance of the trading business the Facility is expected to be repaid via refinance to a traditional ‘bank’ lender

Alternatively, the security property 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