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Thursday, 03 October 2013 11:56

Developers seek bank alternative to get projects off the ground

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Nebo Village We speak to a diverse range of property developers each week, many frustrated that their extremely viable projects cannot get funding through traditional banking channels.  We know that while the mining boom and economy in general may have slowed over the past 12 months, there are still some great opportunities out there. It’s our job to connect feasible developments with private lenders to get these projects off the ground. 

Nebo Village is a great example of a viable project, with all the numbers adding up, which still could not secure bank funding.  While the developer could clearly identify the viability of the project, it wouldn’t have got off the ground with a sole reliance on mainstream banks for funding. Instead, funding was secured for Nebo Village through us, Credit Connect Capital, using private lenders.

Here’s some background for you.

A high demand for well-appointed residential miners’ quarters in the Bowen Basin is presenting vast opportunities for new projects. Nebo Village is a 46 unit resort style accommodation centre in Nebo, in Central Queensland’s Bowen Basin.

Nebo is an hour’s drive from Mackay. The project is centrally located to several coal mines, and is the favoured location for service industries to the mines to base workers. The area, which is rich in coal and gas, accommodates in excess of 1000 coal miners in temporary accommodation.

While there’s been a lot of press about the sizzle going out of the mining sector, Nebo is an area which is displaying significant activity with local mining operators such as Xstrata, Rio Tinto, Macarthur Coal and BHP Mitsui Coal, along with 11 new coal mines due to open, all within a comfortable commutable distance to Nebo Village.

When we looked at the proposal and the funding required we could immediately see that we’d have no trouble finding private lending clients for Nebo Village. The developer is very familiar with the area and knows what the demand is like for good quality workers’ accommodation. They feel with 11 new mines planned to open in the near future, they cannot see that demand waning anytime soon, and we agreed.

We stringently vet our potential borrowers prior to presenting them to private lending clients. We could recognise immediately the potential of this project in the Bowen Basin due to the low lending ratio (LVR) and pre-sold units. The first stage of Nebo Village comprises 21 units - all have been unconditionally pre-sold, allowing the developer to repay the $4.5 million+ interest only loan in full after 12 months. On completion the complex will be valued at $7.369 million. This is typically the type of project our lenders are seeking to offer finance.

An increasing number of investors are looking towards private lending, recognizing the benefits of healthy returns over short terms, with interest usually paid monthly. The terms of the funding is commonly 12-24 months, with no payments released directly to the borrower until a Quantity Surveyor has certified the works have been completed.  Even then, payments will often go directly to the contractor.

Credit Connect Capital Ltd has recently been crucial to the coordination of countless projects, medium and large, which while displaying all the hallmarks of prime development opportunities would not proceed without the role of private lenders. 

We are able to coordinate:

  • Complying Significant Investor Visa Opportunities
  • Mortgage Investment Opportunities
  • Property Investment Opportunities
  • Property Finance
  • Construction and Development Loans
  • Commercial Loans
  • Short Term Loans for Business and Investment Purposes
  • Development Finance
  • Joint Venture Finance
  • Business Finance
  • Mortgage Investments

Construction of Nebo Village is due for commencement early 2014.

Last modified on Thursday, 03 October 2013 15:36
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