JV Opportunity - Proposed 16 x Unit (Resi) Development in Southport, QLD


Viking Capital is presently working with a client who owns 1,007m2 land parcel in the Southport area. Our client holds a late 2015 issued DA for a proposed 16 x Apartment Residential Development on this land parcel, and ideally would like to proceed with this project as quickly as possiblew, while the Gold Coast market is active.

The client is currently involved in a Family JV with this project, however one of the two JV Partners is looking to exit the project, hence the remaining JV Partner, (our client), is looking for one of the following options:

Option 1 - someone to come in as a replacement 50/50 JV partner (the remaining JV Partner can contribute $500K investment into the deal).

Option 2 - someone to purchase the rights to the land with current DA under

Viking Capital comments:

Based on Viking's discussions with the current owners, and a panel valuer for a construction loan on offer from anon-bank lender whohas expressed an interest in funding this project, we estimate the following key deal numbers to be associated with this project;

Development Land Value Estimates:

Conservative Land Value 'As-Is with D.A.' (Ex. GST) $1,075,000

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Est. GRV (Inc. GST) - 16 x Residential House Units $6,960,000 ($435K per Unit)

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Total Est. GRV - Ex GST - (assuming Margin Scheme) $ 6,425,000

Development Costs Estimates (All Figures Ex. GST):

S/Duty for Land Acquisition Cost $ 74,000 (assume $1,075K land settlement)

Misc. Planning & Consulting Fees - DA + BA Fees $ 60,000 (Bulk DA fees already Paid)

Proj. Mngmnt Fees and / or Project Reserve $ 100,000

Council Contributions $ 300,000

Contingency @ 5% of Construction Costs $ 160,000

Civil Works $3,196,000

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Est. Development Cost $3,890,000

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Estimated Equity Requirement

Equity Available from Current JV Partner $ 500,000

To Assist with the Purchase of the Land $ 500,000

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Estimated Total Equity Requirement $1,000,000

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Option 1 - JV Option ....

- if 2 x investors then the investment would be $500K each for a 1/2 share each

- if 3 investors then the investment would be $500K from the current JV partner for a 1/2 share with 2 investors coming in with $250K each for a 1/4 share

Option 2 - The 'Buy-Out' Option ....

As stated above the value of the land 'As Is with DA, (once DA is issued), should be in somewhere the order of order of $1.05M > $1.1M ... and hence the proposed take-over cost if someone wants to come and take over the entire project is available for a price of $1.075K (being GST Exempt if purchased as a Going Concern).

Estimated ROI

Based on obtaining a private non-bank construction loan of circa $4.540M, at an LVR of 70%, over a term of up to 15 months, and at an indicative interest rate of circa 10.35% per annum, (which Viking has already pre-approved), our preliminary funding table estimate indicates the following profit returns are likely (and assuming completed stock is sold down at a minimum rate of 3 x lots per month).

  • 88.5% ROI on total cash invested

  • 17.1% on total project

  • Estimated EBIT is $884.5K (after return of all invested capital and payment of sales commissions)

If this project is of interest as either a straight 'buy-out' or perhaps as a JV of 3 or 4 parties, please feel free to call Gary Simonite on 0438 331 116 for a confidential discussion.

Disclaimer: the project and financial estimates contained in this summary are based on information provided by client to Viking Capital Group and as such Viking Capital Group does not represent these figures to necessarily be 100% accurate. In property development activities variations in the estimated costs and / or sales values may occur depending on a variety of issues, including developer competence, the costs of funds, building costs, and property market res-sale conditions. Viking Capital Group therefore encourages all potential investors to obtain suitable advice before proceeding with any joint venture partnership scenario or project buy-out.

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