- Loans were granted by Macquarie Bank, St. George and ANZ
- The three lending facilities total approximately $142 million in value
- All projects will be finalised by the end of 2024
Australian residential and commercial developer, Fortis, has announced secured lending from Macquarie Bank, St. George and ANZ for three Sydney projects.
The three loans total approximately $142 million in value.
Fortis director Charles Mellick highlights that the recent loans were secured in a demanding commercial real estate finance market.
He says that this “…demonstrates that the major banks are still looking to lend and to take a commercial approach, displaying a strong preference for premium assets and experienced borrowers.”
Fortis, part of Pallas Group, secured the lending facilities to support a completed building valued at $42 million and two construction projects with a combined end value of $242 million.
Macquarie Bank has provided a debt facility of $25 million for the retail and commercial building project situated at 2 Guilfoyle Avenue in Double Bay. This building is currently occupied by long-term tenants such as Baker Bleu on the ground floor and fund manager TDM Growth Partners on three commercial levels above. The current valuation of 2 Guilfoyle Avenue stands at $42 million.
“Macquarie Bank saw significant value in the strength of the lease covenants in this building and were able to lend at an Interest Rate Cover that reflected this.”
“Although we were still required to make a substantial equity injection, we appreciated the commercial attitude taken by the bank,” Mr Mellick said.
St. George provided a construction loan of $52.4 million for the MONA project located in Darling Point, which includes retail and residential spaces. This development features 500 sqm of ground floor retail and 24 apartments, with an estimated total value of around $103 million upon completion. The project has pre-sold eight apartments, including the penthouse that sold for $13.75 million.
Construction on MONA is scheduled to be finished by late-2024.
The ANZ construction loan of $64.3 million was for the Piper residential project, located in Point Piper across from Cranbrook School.
The land was originally acquired by Fortis in mid-2022 in a joint purchase with Dare Property Group.
This project features 14 apartments designed by Luigi Roselli, and it is expected to have a total value of approximately $139 million upon completion. The construction loan is currently 55% covered as six apartments have already been pre-sold.
Construction on Piper is set to be finalized by late 2024.
“These construction loans represented conservative loan-to-value ratios of about 50%, whereas the major banks would probably have loaned about 60-65% of end net value in early 2022,” Mr Mellick notes.
“Accordingly, each project is more equity intensive than it would have been in that environment. On the other hand, in earlier times the major banks would have required that the net value of off-the-plan sales represented 80-100% of the construction loan limits, so in this respect, they will show commercial flexibility for the right project if the developer has a strong track record.”
Pallas Group is the parent organisation of Pallas Capital, a real estate financier and investment manager, as well as Fortis.
