The Sponsors are experienced property developers and required funding to purchase a 3.7ha site in Smithfield Plains, a northern suburb of Adelaide in South Australia. They purchased the site at a mortgagee auction at a significant discount but had to settle the purchase contract immediately. The site is disused school grounds and they had a DA lodged with council for 63 allotments (including a commercial lot of 3,000m2 and a reserve of 3,474m2). Bank finance was not available due to time constraints and lack of serviceability.
Private Mortgages Australia provided an urgent loan of $1,295,000 loan with a 70% LVR and a six month loan term (three months minimum). The Sponsor's exit strategy was to refinance to development funding once the DA was issued by council.
The Sponsors incurred delays with council and needed to extend beyond the original six month loan term. PMA offered the Sponsors the following Extension Arrangement options:
Margin Call: Reduce the Facility Limit from 70% to 65% LVR and service the Lower Rate in addition to a small Roll-Over Fee applied to the outstanding balance; or
Leave the LVR at 70%, service the Lower Interest and accrue the Higher Interest margin on the outstanding balance.
The Sponsors chose the second option and serviced the loan under this arrangement for four months. The DA was granted by council for 80 lots meaning that the Sponsors were able to increase overall yield of the project and increase their profit margin. They ultimately exited by refinancing to a construction loan.
Annualised Return on Investment of 22% p.a. (net of Management Fees)
Total Loan Terms of 10.1 months
Repaid in full 20/12/2018
INTERESTED IN INVESTING?
This opportunity is now open. For more information on current investment opportunities, please contact: