31st January 2018 /
debt management

Blue Sky’s Brisbane Apartment Project Settles

White & Partners 10 month construction loan to a trust managed by a subsidiary of Blue Sky (ASX:BLA) for the development of the Duke Apartment Project in Brisbane was repaid on schedule in October 2017.

White & Partners 10 month construction loan to a trust managed by a subsidiary of Blue Sky (ASX:BLA) for the development of the Duke Apartment Project in Brisbane was repaid on schedule in October 2017.

Representing White and Partner’s first senior lending deal, the loan facility was ~$37 million and had a 10 month term. Investors were returned a net cash multiple on committed funds of 1.09x money.

The Duke now sits as a 15 storey, 125 apartment complex in the inner-Brisbane suburb of Kangaroo Point. Despite highly publicised concerns on apartment settlement rates in Brisbane, the majority of buyers in the Duke were able to obtain finance and settle.

The Duke loan highlights the opportunity to provide attractive risk-adjusted first mortgage investment opportunities on high quality projects:

    • The developer was a subsidiary of an ASX listed fund manager with a proven track record in residential project development in Brisbane;
    • Construction was well advanced at settlement of the loan, with the level 14 slab completed and fit-out of the building underway;
    • 58 apartments or 65% of the loan was pre-sold at settlement of the loan, with the loan 100% covered 5 months later by July 2017; and
    • Funding was lent on the basis of a conservative loan to value ratio of ~63%

2018 will continue to be test for Brisbane, with over 14,000 apartments due for completion. Our Ray White data, which represents 14% of the market, show stability with both prices and sales volumes in 2017 in line with 2016 levels.