Defensive Opportunity

The Place Ashfield

Ashfield, New South Wales

Term 18 months

Project Value $72 million (on completion value)

Loan Type First mortgage Construction Facility

Sector Residential Apartments

Project Highlights
  • LVR of 72%
  • Loan to cost ratio 80%
  • Loan facility $52m

Location was key to the decision to lend for this project which comprised land and construction funding for 91 residential dwellings, 7 retail lots and 3 levels of basement parking.

The Chinese Australian developer had 14 years’ experience with developments in China but was unfamiliar with Australian financial regulations, council processes, and property development practices outside of China. White & Partners did not offer the cheapest funding, but added value to the developer by assisting in project management, review of the building contract and resolving disputes with the builder.

To mitigate default risk, White & Partners actively worked with the external project manager and an independent quantity surveyor to monitor and manage the construction drawdown process. Settlement risk was further mitigated by a sufficient margin of safety between the loan facility and the product sales prices.

The loan facility was structured with a strong security package. In addition to the first mortgage over the property, registered second mortgages were recorded over a further development site and two residential properties. An equity charge was also established on another development site. Settlement risk was mitigated by a sufficient margin of safety between the loan facility and sales prices achieved.