Defensive Opportunity

The Place Ashfield

Ashfield, New South Wales

Origination Date December 2017

Term 18 months

Project Value $72 million

Loan facility $52 million

Credit Metrics
  • Loan to Value Ratio (LVR): 72%
  • Loan to Total Cost Ratio (LTCR): 80%

Asset Class Residential

Project Highlights
  • 91 residential dwellings and 7 retail lots
  • Experienced Chinese Australian developer
  • >100% loan coverage at loan origination
  • Construction progressed at first draw down, with excavation nearly completed

White & Partners has provided an 18 month first mortgage land and construction loan to develop The Place project in the Sydney suburb of Ashfield. The Place is a mixed use development comprising 91 residential dwellings and 7 retail lots above 3 levels of basement car parking. The developer of the project is an Australian citizen of Chinese ancestry who has 14 years’ experience delivering real estate projects in China.

Ashfield is located in Sydney’s inner west, approximately 9 km from the Sydney CBD. Apartments comprise approximately 66% of the suburb’s dwelling structures. Demand for apartments in Ashfield stems from its proximity to the Sydney CBD, abundance of amenities and schools and being well-serviced by public transport. Location was a key aspect which underpinned the appeal of the asset as a loan candidate to White & Partners.

At loan origination, construction of the project is underway, with in ground works completed. As a consequence, construction risk is considerably lower than a typical development financing. 80% of the apartments and 100% of the retail lots have been presold, providing 100% net presales loan cover. A significant proportion of the presales are to foreign buyers, who have all received Australian Foreign Investment Review Board (FIRB) approval to purchase property. Settlement risk is mitigated by a sufficient margin of safety between the loan facility and sales prices achieved.

The loan facility was structured with a strong security package. In addition to the first mortgage over the property, registered second mortgages have been recorded over a further development site and two residential properties. An equity charge has also been established on another development site.

White & Partners is actively working with the project’s external project manager and an independent Quantity Surveyor (QS) to monitor progress and manage the construction drawdown process.