Oct 08 2018Add to Favorites
Balmain Private have provided a residual stock loan to refinance five recently completed residential apartments located at 25 Trent Street, Glen Iris in Victoria.
According to Balmain Private’s head of distribution, Tom Sherston, the $2.2 million loan was syndicated between seven investors via the Balmain Private digital investment platform and oversubscribed within 45 minutes. The investment term is 12 months and forecast return 8.65% net with distributions paid monthly to investors.
“Since Balmain settled the Loan, the Borrower has completed the sale of two of the security apartments, which reduced the (Loan to Value) LVR from 70% to 65%.”
“Balmain decided to hold the investment internally until these two apartments settled to remove unnecessary short-term capital repayment issues for investors investing via the Balmain Private platform”.
The Trentwood complex is situated within Glen Iris, an established residential area 10kms south-east of Melbourne’s CBD and within close proximity to schools, shops, parks, arterial roads adjacent to Burwood train station.
The Borrower is an entity established specifically for the development of ‘Trentwood’, and is part of a large, privately owned development group based in Melbourne. They currently have a pipeline of $1.2b in projects and on average are developing 650 dwellings per year.
“Investors can register on line via the Balmain Private website and once an investment account has been opened, can invest in high quality, lowly geared, syndicated loans, starting in increments of $10,000.”
“Since 2012 Balmain Private has delivered an average of 7.9% net across 150 stand-alone Sub-Trusts totaling an aggregate loan amount of over $500,000,000”.
The current investment landscape in Australia is driven by a range of factors, not least the 2019 federal election, and the view is that the result of the Wentworth by-election, a seat that has historically been monopolised by the Liberal Party, will be the foreshadowing of the federal outcome. The Australian equities market is experiencing volatility, with a 200 point drop last week in the S&P ASX index, the largest drop this year and potentially the result of sentiment surrounding geopolitical headwinds with the latest developments relating to the trade war between the USA and China. Global bond rates remain low, and despite incremental increases, interest rates are too low to be attractive from an investment perspective.
In an ongoing low-interest rate environment on savings and with banks withdrawing from property and construction financing, investment groups like Centennial Property Group are seeing value in providing first mortgage funding for property development, recently settling a $48m loan for a mixed-use retail/residential development in Sans Souci, NSW
With the combined influences of a cooling residential property market and heightened bank scrutiny on all aspects of real estate lending, traditional debt sources are, in many cases, closed to developers and commercial real estate investors, particularly where circumstances require a specific funding solution.
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