Lending Policy

Loan Purpose

CCG Funds provide loans for the purchase, refinance, development or redevelopment of existing commercial or residential property, for new development of commercial or residential property or business loans.

A CCG Fund will only provide first-ranking or senior debt loans secured by a first ranking registered mortgage over real property and will not provide second-ranking or mezzanine loans.

Lending Ratio (LVR)

Prior to the advance being made, a borrower must demonstrate, to the Credit Connect Group’s satisfaction, that it has adequate property or assets to secure the loan.

Loan advanced by a CCG Fund will have a maximum LVR of up to 75% at the time of settlement of the advance.

Interest Rates

The Credit Connect Group will determine the interest rates and fees payable by a borrower having regard to prevailing market rates, the borrower’s borrowing history, the purpose of the loan and any other matter which we consider relevant on a case by case basis.

Interest rates charged by a CCG Fund will be commensurate with the risk of the loan as determined by the Credit Connect Group.

Acceptable Security

All loans will be secured by a registered first mortgage over real property.

Loans may be supported by additional security such as registered first ranking general security agreement over the assets and undertakings of the borrower or guarantees from the directors or owners of the borrower. 

Valuations

An independent valuation will be obtained over each real property which is provided as security for a loan:

1. Before the issue of the loan and generally upon renewal (if applicable);
2. Where the security property is a development property, on both an ‘as is’ and ‘as if complete’ basis and, for all other real property security, on an ‘as is’ basis; and
3. Within two months after the Credit Committee forms a view that there is a likelihood that a decrease in the value of security property may have caused a material breach of the relevant loan agreement.

Loan Term

Loans will generally be of a term of three (3) months to two (2) years.

Loan Assessment

All applications are initially reviewed by a member of the Loan Assessment Team. Loans worthy of further assessment are referred to the Credit Committee.

Unsuitable or non-investment grade loans are rejected upon application.

Only loans with merit are investigated further and those assessed as meeting the criteria set out in the Lending Policy, meeting our compliance requirements and being suitable for our investors are put forth for consideration.

The following list is a summary of the steps which generally form part of, but may not be the limit of, the loan assessment process:

• Credit reference checks from a qualified credit reference agency will be obtained on the borrower and any guarantors. Statements or references from the existing lender confirming a satisfactory repayment history will be obtained where possible;
• An evaluation of independent valuation report of the security property which must be less than 90 days old;
• Third party consultant reports;
• Borrower asset and liability statements;
• Building contracts; and
• Asset inspections and other investigative meetings with the borrower may be undertaken as the Credit Connect Group sees fit.

A formal letter of offer is issued to the borrower outlining all terms and conditions of the loan when the loan is approved by the Credit Committee.

Loan Approvals

All loans require the approval of the Credit Committee.

Additional Procedures for Development Loans

A loan provided for the development or redevelopment of real property will be subject to the following additional procedures:

• Reports by a quantity surveyor or other appropriately qualified person before settlement of the advance and subsequently further reports before progress draws are approved;
• Close management of progress draws to ensure appropriate funds remain undrawn to complete the development;
• If considered appropriate, requiring a certain level of pre-sales before the loan is approved;
• Regular site inspections and, where appropriate, project meetings are attended by an employee or appointed representative of the [Trustee/CCG Fund trustee]; and
• Tripartite agreements are generally entered into with the builder so that in the event the borrower defaults, the builder is contracted to complete development works under the contract for the CCG Fund.

Default Management

The default management procedures in the event of default by a borrower under a loan agreement include but are not limited to the following:

• Upon occurrence of an event of default the [Trustee/CCG Fund trustee] will immediately contact the borrower to ascertain the reason for the default and determine whether the borrower can remedy the default in accordance with the relevant security documentation;
• If an interest or other payment is overdue or another event of default has occurred and subsists, the borrower may be charged interest at the higher rate in accordance with the applicable loan agreement;
• If the default is not remedied within 7 days, the default is escalated to the Credit Committee who will determine whether to instruct lawyers to issue a default notice to the borrower, in accordance with the applicable security documentation;
• If the default is not remedied within 30 days, the Credit Committee will consider instructing lawyers to commence legal proceedings and take such other actions as required to recover the loan;
• A decision by the Credit Committee on whether to instruct lawyers and the action to be taken will be based on what the Credit Committee believes is in the best interest of investors; and
• The Credit Committee will then advise applicable investors of the unremedied default and the course of action it has determined to pursue.