January 2024 Newsletter
Welcome to 2024.
As we kick off the new year, we trust all of our investors, development partners, consultants and advisors have had a happy and restful holiday period.
Having finished 2023 with a number of new settlements within the Ark Wholesale Fund and the establishment of the new Ark Bedrock Mortgage Fund, January has been relatively quiet which is not unusual given the holiday shutdown period. Pleasingly, Bedrock paid its first monthly distribution and recorded an inaugural annualised return of 11.26% p.a. We touch on this more within the body of the newsletter.
During January, Ark welcomed two new employees to the team in Charlie Kiel and Sam Beer, who joined our Origination and Execution Team.
Sam Beer
Investment Analysis
Sam joins Ark in the role of Investment Analyst in the Origination and Execution Team. Prior to joining Ark, Sam worked with Asahi Group Holdings as Finance Analyst and at Westpac in commercial property finance team. Sam has also spent time in the United Kingdom playing professional cricket for Hampshire Cricket Club.
Charlie Kiel
Senior Investment Analysis
Charlie joins Ark in the role of Senior Investment Analyst in the Origination and Execution Team. Charlie is an experienced finance executive having worked in Australia and offshore across structured finance, debt advisory and commercial lending. Prior to joining Ark, Charlie worked at Blue Motor Finance in the United Kingdom and Blue Rock Finance in Melbourne.
Open for Investment Opportunities
The Moorings, Newport NSW
Term: 12 Months
LVR: 65%
Interest Rate: 10.50% p.a. (variable, linked to RBA Cash Rate)
Maturity: 28/02/2025
Deception Bay, QLD
Term: 12 Months
LVR: 58%
Interest Rate: 10.25% p.a. (variable, linked to RBA Cash Rate)
Maturity: 31/01/2025
Morayfield, QLD
Term: 10 Months
LVR: 65%
Interest Rate: 10.50% p.a. (variable, linked to RBA Cash Rate)
Maturity: 16/12/2025
Investment and Performance
Deal Settled: 13
Funds under management: $270 Million
Weighted Average LVR (Current): 61.30%
Forecast Investor Rate: 10.94%
Investment Updates
Prestons 135, NSW
Over the last month construction works have continued to accelerate and are nearing 90% completion on the site.
These works include:
– Supply and installation of concrete precast panels nearing completion
– Further progress of supply and installation of structural steel
– Internal fitout works to building C, E + F being well progressed
– Installation of roof sheeting and plumbing to building C, E + F is progressing well
– External stormwater line installation is in progress
ARK is currently negotiating with the Borrower on a potential short-term extension to allow them sufficient time to procure a longer term refinance post completion of construction.
Banks, ACT
Following the re-signing of the 15-year lease with IGA the Borrower continues to work through the process of refinancing the current ARK Facility on or before the maturity date.
Kingaroy, QLD
After receiving approval for their first round of federal and state government grants which is expected in March 2024, the Borrower has applied for a second round of grants with the response time estimated to be in the vicinity of 4-8 weeks.
ARK is providing the Borrower with a 90-day extension of the current facility maturity date from 5/02/2024 until to 5/05/2024 to allow sufficient time for an updated valuation to be completed and for a refinance into a new facility either provided by ARK or an alternative financier.
Canberra, ACT
The Borrower has now secured construction funding for the Project and the Facility is forecast to be repaid on or before the maturity date of 26/02/2024.
Oakleigh, VIC
The first progress drawdown is expected to be paid in March 2024. The most recent QS progress report notes that the following works have been completed:
– Demolition of existing building
– Site establishment
– Site excavation and fill
The QS also notes that in ground plumbing works, bored piers and concrete footings were part of the work in progress.
Morwell, VIC (Mezzanine)
Settlements have commenced at the Mernda security property and loan repayments have been met as required under the finance documents.
The loan continues to perform in line with ARK’s original expectations.
Ballarat North, VIC
ARK obtained external planning advice in relation to the Ballarat North Precinct Structure Plan (PSP) and it is anticipated that the gazettal of the PSP will occur in mid-2025. The Borrower continues to work through the planning process.
As the facility nears maturity in June 2024, it will be refinanced or repaid prior to this.
Mount Cottrell, VIC
The Borrower has continued to progress town planning in relation to the Oakbank Precinct Structure Plan (PSP) with the due diligence phase from VPA and council to be finalised in the next 6-12 months.
The PSP is estimated to be to 2-3 years from the completion of this due diligence phase and ARK continues to monitor the status of the Oakbank PSP as the loan draws closer to maturity in June 2024.
As the facility nears maturity in June 2024, it will be refinanced or repaid prior to this.
1383 Dohertys, VIC
The borrower has continued to progress in the planning application for the Oakbank Precinct Structure Plan (PSP) with the due diligence phase from VPA and council to be finalised in the next 6-12 months. The PSP is estimated to be to 2-3 years from the completion of this due diligence phase and ARK continues to monitor the status of the Oakbank PSP as the loan draws closer to maturity in June 2024.
As the facility nears maturity in June 2024, it will be refinanced or repaid prior to this.
Leakes Road, VIC
The Warrensbrook Precinct Structure Plan (PSP) is moving towards adoption in the next 5-6 years. Warrensbrook PSP is the natural progression following Plumpton and Rockbank North PSP’s which are completed.
As the facility nears maturity in June 2024, it will be refinanced or repaid prior to this.
Kyneton, VIC
The Borrower is continuing to work further design, leasing, and sales to be in a position to commence construction at the maturity of the facility.
As the facility nears maturity in May 2024, it will be refinanced or repaid prior to this.
Grantville, VIC
The Borrower is continuing work during the planning phase and expecting to obtain a planning permit towards the end of the first quarter of 2024.
As the facility nears maturity in May 2024, it will be refinanced or repaid prior to this.
Mt Barker, SA
The construction program is progressing well and ahead of forecast. All 22 units in the Totness-Trading-Hub have now been pre-sold.
ARK inspected the site in late January and currently expects the facility to be repaid approx. 1-2 months ahead of the maturity date in June 2024
Gungahlin, ACT
The development group are working through a value add permit over the site. Once this process is complete, the group will engage with ARK in relation to a possible construction facility for the overall development or alternatively the facility will be refinanced by another lender on or before maturity.
Burpengary, QLD
Works on site have been progressing well over recent months.
The key milestones achieved to date are:
– The site was established with temporary fencing and sediment control in place
– Roadworks are progressing with sub-base placed to the internal roadway
– Kerb and channelling works are nearing completion
– Crossover water reticulation services are complete
– Stormwater drainage works are progressing
– Electrical conduiting to crossovers commenced.
Baldivis, WA
Following settlement in November 2023 the builder has signed the construction contract with works set to commence on the site in the first week of February.
Margaret River, WA
Following settlement of the loan in November 2023, Stage 1 construction has been finished. Stage 2 construction on the site has now commenced.
ARK will continue to monitor settlements for this residual stock facility.
Sellicks Beach, SA
Planning approval was obtained in December 2023. Sales have commenced and been received well by the market.
The Borrower is currently in negotiations with a civil works contractor and intends to commence construction in Q2 2024.
ARK has been mandated to provide the Borrower with a construction facility for the development.
North Melbourne, VIC
Following settlement in early January 2024, the Borrower has relaunched sales and marketing activity and continued to progress discussions with the preferred builder under an ECI process. ARK is actively monitoring progress towards refinance via a construction facility.
Mont Albert, VIC
Following settlement in late December 2023, the Borrower has continued to progress the planning amendment for a new boutique hotel scheme on the site. The Borrower has commenced negotiating a lease agreement with a preferred hotel operator.
Toowoomba, QLD
Following settlement in late December 2023, civil works have now commenced and are progressing well. First progress claim is expected for mid February.
The estate has received a strong response from the market with limited sales & marketing activity undertaken by the Borrower. 13 out of a total 23 allotments are now subject to an expression of interest. The Borrower is withholding certain lots from the market to achieved maximum value by releasing them closer to when titles will be issued. Construction is on track to be completed by June.
Box Hill, VIC
Following settlement in late December 2023, the Borrower continues to progress leasing discussions however given this site forms stage 2 of their wider Wellington Health precinct they remain focused on firstly full leasing the first stage.
Leasing and marketing activity has been escalated and there is a high level of engagement with large listed and unlisted medical groups, as well as other physicians and specialist services.
Bedrock Mortgage Fund Update
Ark was pleased to launch its new Ark Bedrock Mortgage Fund in December 2023, achieving a maiden distribution of 0.96%, or 11.26% annualised and paid to investors on 10 January 2024.
The Fund ended December with $7.4m in Funds and investments in 7 mortgage investments across Melbourne, Sydney, Regional QLD and Regional SA.
The diversity breakdown of investments is as follows:
Ark Bedrock Fund is a unit trust, formed by Ark Capital in response to demand from existing and prospective investors seeking a pooled mortgage fund option.
Investments made by the Bedrock Mortgage Fund will initially be 100% in Loans originated and settled by the Ark Wholesale fund, in syndicate alongside other contributory investors. This ensures Ark Bedrock can offer a diversity of loan types, sectors, tenors, borrowers and geographies, hence reducing investment concentration risk. The projected returns of the Bedrock fund for the period to December 2024 are in the range 10.75% to 11.25%
Available to: Wholesale investors
Min invest: $50,000
Distributions: Paid Monthly
Redemptions: Quarterly after minimum initial term of 6 months
DRP: Distribution Reinvestment IS available
Unit Issues: First day of each calendar month
Updates: Annual distribution statements and quarterly updates of the Fund’s performance
Investments: At least 85% in registered 1st mortgage securities with up to 15% potentially invested in registered 2nd mortgages
LVR: Average 65% across the 1st Mortgage investments
Fees: 0.75% Fund Manager fee
Direct Costs: Up to 0.25% direct costs