Focus area

State of the Market

FIRST MORTGAGE GUIDELINES

Preferred Deal Size  $5 – $15 MILLION  (Max $20m)

Maximum LVR Guidelines

MAX on Principal PEAK
Land Subdivision65%70%
Land SettlementUp to 65% subject to planning status and exit65–70% based on Borrower and project
Residual Stock65% if serviced70–75%
Construction65%70–75%

Mandate Guidelines

Deal Size$2–$10m
Minimum IRRRBA cash rate +5%
Loan TermUp to 3 years
Serviced LoansBetter for monthly distributions
Population RequirementMinimum 50,000 in SUA

COMPETITION THREAT LEVEL

Aggressive Low Range $1.5m – $3m
Dorado Blue Ocean $3m – $12m
Aggressive High Market $12m+

SEEK

  • Boutique developments
  • Infill developments
  • Industrial construction and subdivision
  • Relatively easy construction
  • Smaller projects not needing many sales

AVOID

  • Larger projects with significant asset management
  • High rise apartments
  • Large subdivision in suburbs with no services
  • Questionable Borrower Characters

CAUTION

Construction

  • Builder collapses
  • Civil construction lending safer
  • Cost escalation due to supply issues, difficult to get pricing commitment

Land

  • Boring is better
  • Dangerous when scale developments and long lead time in construction

Residential

  • Pre-sales difficult – finished products preferred
  • Purchasers subject to finance
  • Difficult to accept large residential developments with minimal pre-sale coverage because of marketability uncertainty

ECONOMIC OUTLOOK

Positive Sentiment

  • House and Unit Prices and Rents continue to grow
  • Population growth has slowed but continues, putting continuous pressure on the housing market
  • Historically low unemployment
  • National Dwelling undersupply creating opportunity for more development and price growth

Focus on Exit

  • There is high inflation
  • Housing affordability keeps on deteriorating
  • Builder collapses and high labour costs