May 2024: Investment Updates

The latest investment updates are set out below with all projects progressing steadily.

As an overview, residential projects/investments in southeast Queensland, South Australia and Western Australia are benefiting from relatively strong markets being driven by population growth and affordability advantages compared with Melbourne and Sydney. Likewise major regional markets in Victoria and New South Wales are benefiting from affordability differences when compared to their capital city counterparts.

In Melbourne and Sydney, underlying demand for new residential dwellings is sound although input costs and taxes remain elevated meaning that sales trajectories are slower although this is not impacting underlying valuations.

Conditions in the Industrial sector generally remain sound with an ongoing underlying shortage of land; as well as the Social (health and childcare) sector where significant government support underpins occupiers.

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Banks, ACT

Progress continues to be made with the refinance however the Borrower has advised that additional time will be required. ARK anticipates that the facility will need to be extended for a further 6-months.

Kingaroy, QLD

ARK has received confirmation of a refinance to be provided by NAB with the facility now on track to be repaid by 4 June 2024 following a further 30 day extension.

Oakleigh, VIC

Construction continues to progress with the ground floor concrete slab now close to completion. Precast panel walls to the ground floor and first floor are currently being installed.

Morwell, VIC (Mezzanine)

All project settlements have occurred.

Stage 1 has achieved practical completion and works for Stage 2 are underway. Sales remain strong, with the Borrower securing 96 presales out of 113 available lots in Stages 1 and 2. A Section 173 agreement has been approved with VicRoads, with signing expected in the next 1-2 weeks.

The Borrower is progressing with the commencement of bulk earthworks for Stages 1, 2, and 3 at Morwell, having appointed a well-respected civil contractor. Sales are strong with 35 presales achieved in Stage 1.

Ballarat North, VIC

The gazettal of the Ballarat North PSP is still anticipated to occur in mid-2025. The Borrower continues to progress through the planning process.

Negotiations are in their final stages with the Borrower to extend the facility a further 12-months, following expected maturity in June 2024.

Mount Cottrell, VIC

ARK has agreed terms with the Borrower to refinance the facility into a new 12-month facility upon maturity at the end of June 2024 which will be secured by the remaining two properties. An updated valuation has confirmed a slight uplift in the value of the two security properties.

1383 Dohertys, VIC

ARK has agreed terms with the Borrower to refinance the facility into a new 12-month facility upon maturity at the end of June 2024.

Leakes Road, VIC

ARK has agreed terms with the Borrower to refinance the facility upon maturity into a new 15-month facility at the end of June 2024.

Kyneton, VIC

The facility has been extended until 30 June 2024 to provide the Borrower with additional time to find an alternative financier. ARK expects the facility to be refinanced on or prior to the maturity date.

Grantville, VIC

The facility matured during the month. The Borrower has since secured a refinance offer from Lambert Capital and the facility is expected to be refinanced in mid to late June.

Gungahlin, ACT

The Borrower continues to explore an alternative development plan for the project as a result of the favourable rezoning of the area where the property is located. Initial drafts of the redesigned plan show an increase of over 500 apartments from the current 283.

It is likely that the facility will be refinanced into another land facility at maturity which is also expected to be provided by ARK.

Burpengary, QLD

Construction on site is now complete. Settlements are expected to commence by the end of June 2024 with the Borrower confirming 11 unconditional sales totalling $9.8m, achieving 100% debt coverage.

Baldivis, WA

ARK continues to monitor the construction programme following delays earlier this year.

Further preliminary works have commenced on site including the following:
– Excavation of perimeter footings undertaken.
– Under slab drainage mobilised.

Margaret River, WA

Stage 1 of the project has now been fully sold. ARK anticipates that the settlements from Stage 1 will repay the facility in full in early June.

Sellicks Beach, SA

The Borrower has successfully negotiated and executed a civil works contract, with earthworks commenced on site in Q2 2024.

To date, 13 of the 42 residential lots within the project have been presold with a further 3 on hold. Heightened interest is expected to be received following the commencement of construction.

ARK is mandated on providing funding for the construction facility, with settlement expected in June 2024.

North Melbourne, VIC

Further sales continue to be achieved within the project. An additional sales agency has been appointed and several local agents have engaged to capitalise on the considerable interest that has been received.

The Borrower has commenced discussions with alternative builders given that a construction contract is yet to be executed with the original preferred builder.

The facility is expected to be extended for an additional 2 months to provide additional time for the Borrower to complete the refinance given the delays in appointing a builder.

Mont Albert, VIC

Preparation for submitting the revised planning permit for a boutique hotel project is progressing well.

The Borrower expects to complete the final design for the hotel within the next few months and to receive the updated planning permit by the end of 2024

Toowoomba, QLD

Works are nearing practical completion on site which is forecast for July 2024.

Current update of works to date include:
– Site was established with appropriate signage
– Stormwater and sewer works nearing completion.
– Kerbs and channels are complete, with asphalt nearing completion.
– Footpaths are progressing well. In addition, electrical road crossings were complete and turfing has recently commenced for landscaping contract works.

Box Hill, VIC

The Borrower remains focused on fully leasing the initial phase of the project as the top priority. Increased efforts in leasing and marketing will continue in the near term.

Newport, NSW

The largest allotment within the project has an agreed sale price of $12 million, which is 14% higher than the valuation. Formal execution of the sales contract is imminent.

The hard launch of the marketing campaign in May received a very positive response, attracting further interest and publicity.

Majority of demolition and site clearing is complete, with the commencement of earthworks anticipated by July 2024.

Discussions continue with several interested buyers, who have made significant headway in the design for potential builds post settlement of the land.

Gawler East, SA

Draft civil contracts and information on stages 5-8 have been received, with execution expected June 2024.

Further sales continue to be achieved, further underpinning the project fundamentals.

ARK anticipates refinancing the facility into a construction loan before the maturity date, as most major conditions precedent are on track to be satisfied.

Deception Bay, QLD

Works continue to progress well onsite.

Key milestones achieved since the previous update are:
– Road subbase level was achieved, with seal and asphalt to commence.
– Retaining walls are progressing well
– Respreading of topsoil had commenced

The project has achieved 18 out of 38 lots sold to date.

Munno Para, SA

ARK reached financial close on the facility and the subsequent settlement of the property in April. Further updates on the future land subdivision on the site will be provided later this year.

Morayfield, QLD

Works have now commenced on site and are progressing well.

Shepparton North, VIC

ARK reached financial close on the facility and the subsequent settlement of the property during the month.