Key Summary:
- The loan enabled the construction of an architecturally designed Childcare.
- Provided the borrower with capital to enhance their property and business operations.
- Investors earned a regular income of 9.75% p.a., secured by a registered first mortgage.
Loan Overview:
A well-established Australian property investment and development company approached us for first mortgage funding to support the construction of a 110-place childcare centre in Bellfield, VIC. The funding was crucial in allowing the developer to move forward with construction and bring the project to completion.
The key details of the first mortgage loan were as follows:
- Loan Type: Property Development - Childcare Centre
- Loan Amount: $3.96M
- Loan Timeframe: 16 months
- Loan Structure: Fixed rate, Interest only.
- Investor Return: 9.75% p.a.
- LVR: 63% (On Completion)
The Challenges:
The borrower sought $3.96M in first mortgage funding, structured over 16 months, to complete the childcare centre construction. The project was already pre-leased, ensuring a stable income stream upon completion.
- Construction funding - required to complete development of a 110-place childcare centre.
- Timely financing - essential to maintain the momentum of the project and ensure the construction was completed within the designated timeframe.
- Pre-leased commitments - meant the borrower needed to stay on schedule to meet the terms of the pre-lease agreement for a $396,000 annual rental.
- Management of costs - required careful oversight to ensure that the project stayed within the $3.48M contracted build cost.
Our Solution:
Credit Connect Group (CCG) provided our borrower client with a first mortgage loan of $3.96M, structured as a 16-month interest-only facility. The loan was secured by robust legal protections and strong financial backing, ensuring that investor capital remained protected while the project progressed.
The loan was secured by:
- A first registered mortgage over the property in Bellfield, VIC.
- Personal guarantees from the director of the borrowing company
- A General Security Agreement (GSA) over the borrower’s assets.
The loan was structured with an LVR of 63% on completion, with a strong valuation of the property at $6.3M once the project was finished. The contracted build costs were confirmed at $3.48M, which were assessed and monitored by the independent quantity surveyor.
The solution allowed our borrowing client to proceed without delays, ensuring the childcare centre was constructed within the projected 16-month term. The childcare centre, designed with a total gross floor area of 1,721m², featured 24 basement car parks and multiple amenities designed to support early childhood education. Located in Bellfield, approximately 9 km from Melbourne CBD, the development was strategically positioned to meet local demand.
With pre-leased commitments already in place, the project secured strong financial backing, ensuring that the project was not only completed on time but also financially viable for the long term.
Investor Benefits:
- Investor Return: Investors received a consistent monthly return throughout the 16-month loan term, providing stable, attractive, monthly income.
- Security: The loan was backed by a first mortgage over the childcare development, offering substantial security for investor capital.
- Capital Preservation: A conservative LVR of 63% ensured that investors' capital was protected throughout the loan term, with the property’s on-completion valuation providing a solid buffer.
- Pre-Leased Property: The property was pre-leased at $396,000 per annum, ensuring a strong income stream from a reputable childcare operator and further securing the loan.
- Strategic Location: The project’s location in Bellfield, near Melbourne’s CBD and key amenities, ensured high demand for the childcare facility, enhancing the long-term value of the investment.
This secured loan offered sophisticated investors a compelling 9.75% return, backed by Australian real estate in a prime location. Investors benefitted from consistent income distributions and the security of a first mortgage over a fully pre-leased childcare development.
Get started...
Need flexible financing for your next property development? Contact CCG today to discover tailored funding solutions to help you meet your project goals. Call us on 1300 795 507 or email us at [email protected].