Oct 23 2018Add to Favorites
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
The $48m loan was syndicated across Centennial Property Group’s sophisticated investor base.
“We believe there are compelling opportunities to provide secured debt funding to the commercial sector with the potential to achieve risk-adjusted returns to investor portfolios”, says Kim Kitchen, Director – Marketing & Distribution.
“The strong investor interest is as a result of the withdrawal of first-tier banks from the commercial lending landscape over recent years”.
“CPG is targeting an Investor annual rate of return in the double digits and an approximate 1.1x multiple net of fees over a 21-month term”.
With the project located on Rocky Point Road, Sans Souci, the loan was provided by CPG to construct a five-story mixed-use retail/residential development accommodating 95 residential apartments above 472sqm of retail space with basement parking for a minimum of 167 vehicles.
The first mortgage loan terms provided by CPG reflected a Loan to Total Development Cost ratio of 78% and an ‘On Completion” Loan to Value Ratio of 66%. The funding was supported by minimum presales to debt covenant of 75%.
CPG’s commercial lending division is headed by Mark Zukerman, who joined the Group in November 2017 after having worked for Australian Unity in their Commercial Mortgage Trust business for more than 10 years. Mark has worked in the commercial lending and corporate banking sectors in Australia and overseas for the past 26 years.
“The developer has a compelling track record in property development in Sydney and the suburb of Sans Souci is one that we are particularly comfortable with based on the strong local owner-occupier buyer profile”, says Zukerman.
Centennial Property Group has completed more than $1 billion of transactions and produced an average internal rate of return across the portfolio of over 25%.
Dexus today announced its result for the half year and reaffirmed its guidance for distribution per security growth of circa 5% for FY19. Dexus Chief Executive Officer, Darren Steinberg said: “It has been a productive six-month period where we have added value through enhancing our development pipeline and attracting new investors to our funds management business. This has all been achieved while maintaining low balance sheet gearing. “In our office portfolio we continue to outperform the MSCI office benchmark1 over one, three and five years through driving higher rents and lower incentives, particularly in Sydney which has been reflected in property valuations during the period. “In our funds management business, we now have $15 billion under management with investors and partners that can invest alongside us through the cycle, reinforcing our objective of being the wholesale partner of choice in Australian property.”
CapitaLand Commercial Trust Management Limited, the Manager of CapitaLand Commercial Trust (CCT or Trust), is pleased to report distributable income of S$83.1 million for the quarter ended 31 December 2018 (4Q 2018), an uplift of 10.7% from 4Q 2017. Distribution per unit (DPU) was 2.22 cents, 6.7% higher than the 2.08 cents a year ago. Gross revenue and net property income for the quarter increased by 14.8% and 16.6% year-on-year respectively. The better performance was largely attributed to the contributions from newly acquired Asia Square Tower 2 and Gallileo, which more than offset the loss of income from the divestment of Twenty Anson.
Residential developer Legacy Property is set to commence a syndicated equity raise for its 7th and final stage of Caddens Hill, with minimum investment amounts starting at $250,000, targeting 17.5% investment return over the twelve month construction period. Legacy Property has $3bn of projects completed and in progress consisting of c.3,600 dwellings . 14 projects have been completed with another 7 underway, gross completed project values range from $85m to $248million for each project.
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