Peer Estate is making available to you a first mortgage investment opportunity secured by a development site located at 74 Alcock Road, Truganina VIC 3029 (the ‘Property').

A commercial investment loan facility of $2,600,000 (the ‘Facility'), at a maximum Loan to Value Ratio (LVR) of 65% will be provided against the ‘as is’ market value of the property.

The proceeds of the Facility will be utilised to assist the acquisition of the security property and provide time for the approved subdivision of the site into 2 separately titled lots to be completed and sold.

The Facility will have a maximum term of 12 months.

Key Deal Points

  • Truganina is located approximately 21 kilometres west of the Melbourne CBD and forms part of the western growth corridor.
  • First Registered Mortgage over the Property
  • The property benefits from 2 recent Development Approvals (“DA”)
    • i) to subdivide the land into 2 separately titled lots and
    • ii) to complete a 33 townhouse development on one of those lots
  • LVR of 65%
  • Interest Rate of 7.0% per annum to investors, net of a 0.50% per annum Peer Estate management fee, paid monthly in arrears.

PROPERTY

This Peer Estate Facility will be secured by a first registered mortgage over the subject property located at 74 Alcock Road, Truganina. The suburb of Truganina is situated approximately 21 kilometres west of the Melbourne Central Business District.

Truganina is largely characterised by low-density development and is growing rapidly. The growth is primarily due to affordable housing and the area's location within a growth corridor that is close to the major manufacturing areas in neighbouring Laverton and in close proximity to the CBD.

The property is a 9,373 sqm rectangular shaped vacant lot. It is DA approved for a proposed subdivision into 2 separately titled lots with land areas of 2,214 sqm (Lot A - commercial) and 7,159 sqm (Lot B - residential). 

A separate DA approval is held to develop 33 townhouses on Lot B.

‘Heads of agreements’ have been signed with two parties who would like to purchase each of the proposed Lots A & B once the approved subdivision has actually been completed and the two individual titles issued.

An independent valuation was completed on 10 March 2021 under instruction from Peer Estate, with the valuer estimating the ‘as is’ market value of the Property to be $4,000,000 exclusive of GST. The valuer estimated the ‘as if complete’ market value of the property (once the two-lot subdivision has actually been completed and separate titles issued) to be $4,800,000. The 65% LVR on this Peer Estate facility is based on the ‘as is’ value.

 

SPONSOR AND BACKGROUND

The borrower is a new Special Purpose Vehicle (SPV) created to acquire the security property. The sponsors are a husband and wife who run a successful telecommunication business which was established 10 years ago. This business has a turnover in excess of $3 million per annum with major clients such as NBN Co Limited and Service Stream Limited. 

An unlimited guarantee and indemnity is being provided by this business as well as by each of the sponsors personally.

Capital Structure Stack

  • 35.0%
    Equity $1,400,000.00
  • 65.0%
    Senior Debt $2,600,000.00

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 10 March 2021 under instruction from Peer Estate with an ‘as is’ value of $4,000,000.

The Peer Estate loan represents an LVR of 65% which is considered acceptable with the property being a DA approved site and the loan representing a bridging facility pending the completion of the subdivision and sale of the 2 resultant lots.

Interest Servicing Risk

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

Mitigant

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

Exit Risk

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

Mitigant

The valuer has estimated the time to complete the DA approved subdivision and achieve a sale of the two proposed lots at seven months.

The sponsors own several other investment properties which could be liquidated to free up cash to repay the Peer Estate loan.

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