Behind the Deal Behind the Deal: Geelong, VIC | $27m

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When you see a development opportunity that’s outside the box, you need a partner who can look beyond the barriers – and help you bring your vision to life.

When developer EVR Group saw an opportunity to build a 15-storey serviced apartment development in Geelong, Victoria it jumped at the chance.

The development will boast 80 executive studio apartments, nine two-bedroom residential apartments and two three-bedroom penthouse apartments with stunning views over the ocean and yacht precinct. After securing a planning permit, EVR also locked in serviced apartment provider Punthill as a key tenant – striking a pre-leasing agreement to manage the studio apartments.

The developer planned to retain the Punthill-operated apartments as an investment and sell the residential apartments. But with few lenders able to move on a development of this scale outside of a capital city, EVR was in a holding pattern. It needed a partner with a commercial view and a hands-on approach. A lender that could move fast and be flexible, with a deep understanding of construction.

With the backing of an experienced group such as Punthill and an opportunity to fill a growing gap in a thriving city, we could see the project’s potential – and knew we had the internal expertise to bring the developer’s vision to life.

The details of the deal

Location

Geelong, VIC

Loan amount

$30.0 million

Term

18 months

LVR

65.0%

Purpose

Construction of apartment hotel

Product

Construction finance

Type of development

Apartment hotel (80 studio apartments, 11 residential apartments, conference rooms and meeting facilities)

Exit strategy

Pre-leasing agreement, sell 11 residential apartments and refinance

By going above and beyond, we were able to structure a flexible deal quickly that provided the developer certainty in turning their vision into a working, living building.”

Andrew Vamvakaris, Director – Victoria

EVR Group’s development in Geelong is a significant investment outside a capital city – restricting the pool of available lenders willing to take on a serviced apartment project over 10 storeys, with a budget exceeding $20 million. This left EVR Group looking for a lender who could understand and work with all three elements: location, scale and construction expertise. And do this fast.

Having worked closely with EVR Group on a previous development in Essendon, Assetline Capital had developed experience in the unique requirements of building serviced accommodation – and we decided to work together again in Geelong.

With investment in Avalon airport, emerging defence contracts and a growing business economy, Geelong is a thriving city that’s poised for future growth. Deakin University and University Hospital are also set to drive accommodation needs in the area, so the business case for the development made sense. Punthill’s involvement was a critical element in the deal as ultimately, its success is underwritten by the future lease of the studio apartments.

Our in-house construction team reviewed planning and building permits, interviewed the builder, reviewed past projects, and worked with quantity surveyors to assess the risks. We have engaged an external quantity surveyor on a long-term basis to maintain a regular presence and involvement throughout the construction process. This allows us to mitigate risk through a second set of eyes – while giving the developer certainty that they’re getting the best value for money.

Our property team also modelled the positive implications of selling down the residential apartments as part of the loan exit strategy. The scenario analysis demonstrated that a residual stock loan could be provided if some apartments remained unsold. In just three weeks we structured a deal that allowed the developer to start construction straight away – and gave them the certainty they needed to bring their vision to life.

When completed in late 2023, the developer will keep the asset as an investment – allowing them to continue to build their growing portfolio.

If you’d like to discuss a construction, bridging or long-term loan scenario with us, please get in touch with our team.

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