JV Opportunity - Proposed 13 x Townhouse Unit (Resi) Development in Eagleby, QLD


Viking Capital is presently working with a client who owns a 2,529 m2 land parcel in the Eagleby area. Our client holds a late 2016 issued DA for a proposed 13 x Townhouse Residential Development for this land parcel, and ideally would like to proceed with this project as quickly as possible, while the S/E Qld market is still reasonably active.

The client is currently involved in an overseas JV with this project, however one of the two JV Partners has decided to invest his funds earmarked for this project into another project overseas, hence the remaining JV Partner, (our client), is looking for someone to come in as a replacement JV partner (the remaining JV Partner has contributed circa $290K investment into the deal to date).

Viking Capital comments:

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

Development / Project Estimates:

and Value 'As-Is with D.A.' (Ex. GST) $700,000

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Est. GRV (Inc. GST) - 13 x Residential House Units $3,985,000 ($300.5K per Unit)

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Total Est. GRV - Ex GST - (assuming Margin Scheme) $3,675,909

Development Costs Estimates (All Figures Ex. GST):

Misc. Planning & Consulting Fees - BA Fees $ 55,400 (Bulk DA fees already Paid)

Proj. Mngmnt Fees and / or Project Reserve $ 38,000

Council Contributions $ 323,500

Contingency @ 5% of Construction Costs $ 80,500

F/P Contruction Contract $1,609,500

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Est. Development Cost $2,106,900

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Estimated Equity Requirement

Equity Provided by Current Land Owners $ 290,000

From Incoming Partner to Assist with Project Costs $ 159,400

From Incoming Partner to Assist with Land Debt $ 326,800

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Estimated Total Equity Requirement $ 776,200

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JV Option Summary ....

- The land owners investment would be $290K each for an estimated 37.36% profit share in this project.

- The balance reqired investment would be $486,200 from the incomingJV partner for an esimated 62.64% profit share in this project

The estimatedalu value of the land 'As Is with DA', should be in somewhere the order of order of $700K to $730K ...

Estimated ROI

Based on obtaining a private non-bank construction loan of circa $2.2418M, at an LVR of 61%, over a term of up to 15 months, and at an indicative interest rate of circa 9.75% 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).

  • 64.2% ROI on total cash invested

  • 17.9% on total project

  • Estimated EBIT is $498.5K (after return of all invested capital and payment of sales commissions)

Estimated ROI

If this project is of interest 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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