Peer Estate is making available to you a first mortgage investment opportunity secured by a property located at 60 Redstone Hill Rd, Sunbury VIC 3429 (the ‘Property’).

A commercial investment loan facility of $1,000,000 (the ‘Facility’) will be provided at a Loan to Value Ratio (LVR) of 12.20% measured against the current market value of the property.

The proceeds of the Facility will be utilised to assist the acquisition of the security property.

The Facility will have a maximum term of 24 months.

Key Deal Points

- First Registered Mortgage over the Property.

- Sunbury has a population of approx. 36,000 people (2016 census) and is located 39kms northwest of the Melbourne CBD.

- LVR of 12.20% measured against the current market value of the property

- Interest Rate of 7.00% per annum to investors, net of a 0.50% per annum Peer Estate management fee, paid monthly in arrears.

- An Interest reserve of $18,750 (equivalent to approximately three months’ interest commitments) to be held for the term of the loan.

PROPERTY

This Peer Estate Facility will be secured by a first registered mortgage over the subject property located at 60 Redstone Hill Rd, Sunbury VIC 3429.

The security property represents a total site of approximately 7.29 hectares. It is considered to be regular in shape and features a frontage to Redstone Hill Road of ~194 metres and a depth of ~416 metres.

The subject property has to date been used as a rural lifestyle allotment and is improved with a 1970’s built single storey dwelling with garage and sheds. Whilst currently tenanted, the valuer has commented that these improvements do not add value to the underlying value of the land and as such for valuation purposes the property is effectively vacant land suitable for residential development.

The property is considered to be prime for future subdivision and is expected to yield 103 land allotments (of various sizes ranging up to 504 sqm per lot) – together with a proposed reserve (a rural conservation zone) of ~2.1 hectares.

The property now benefits from a planning permit issued by council in September 2021, providing for a staged subdivision and whilst the permit contains numerous conditions the valuer suggests that none are onerous.

Following settlement of the purchase, the Borrower will proceed to seek approval of a formal plan of subdivision and then either i) sell the property as a “Development Ready” site to a developer or ii) refinance to a construction finance facility to complete the subdivision works

An independent valuation was completed on 29 October 2021 under instruction from Peer Estate, with the valuer estimating the current market value of the Property to be $8,200,000 exclusive of GST. This current valuation is higher than the purchase price of the property being $6,220,000, however Peer Estate consider this acceptable on the basis that the contract of sale was entered into back in September 2020 (on long settlement terms) and in the intervening period a planning permit has been approved.

 

SPONSOR AND BACKGROUND

The borrower is a new Special Purpose Vehicle (SPV) established by the sponsor to acquire the security property.

The sponsor migrated to Australia approx. 5 years ago and shortly thereafter commenced a business importing a variety of auto parts (tyres, tubes, window tint, ceramic coating, automotive films, etc) from China and wholesaling/retailing these to local workshops and privately owned car yards throughout Melbourne.

The sponsor and her husband (who resides overseas) also operate a rubber manufacturing business in their home country (but being offshore Peer Estate has not conducted any due diligence on this).

An unlimited guarantee and indemnity is being provided by the sponsor’s (Australian) operating business and by the sponsor personally.

Capital Structure Stack

  • 87.8%
    Equity $7,200,000.00
  • 12.2%
    Senior Debt $1,000,000.00

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 was completed on 29 October 2021 under instruction from Peer Estate, with the valuer estimating the current market value of the Property to be $8,200,000 exclusive of GST. This corresponds to a very conservative LVR of 12.20%.

The property benefits from a planning permit which provides for a staged sub-division and is located within a high growth corridor within the Sunbury South Precinct. 

 

Interest Servicing Risk

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

Mitigants

The sponsor has an established operating business whose cashflow generation is expected to be sufficient to service interest on the new Peer Estate loan.

Peer Estate will additionally hold an interest reserve equivalent to three month’s interest commitments.

 

Exit Risk

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

Mitigant

Once a formal plan of subdivision is approved, the sponsor plans to either i) sell the property as a ‘development ready’ site or to ii) refinance to a construction finance facility to complete the subdivision works

The low LVR of 12.20% provides for a very comfortable exit in the unlikely event Peer Estate needed to enforce the loan and sell the property.

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