Bangor Case Study

Montrose’ director John Benporath, structured a short term second mortgage facility for $485,000 secured over 5 mostly built town houses Bangor 30kms SW of the Sydney Central Business District. The security also included a debenture charge over the borrowing company, the company directors’ guarantees, and a deed of priority with the first mortgagee.

The loan-to-valuation ratio against the security property was 81%. The appraisal highlighted the shortage of property in the area and the high standard of finish of the project noting that the townhouses should sell well at the valuation prices.

The purpose of the loan was to provide additional funding to complete the acquisition of the borrower’s next development site as the current project neared completion.

Construction was 90% complete at the loan outset, with the balance of construction funding being provided by the first mortgagee, St. George Bank, at an interest rate of 9.5% per annum. Interest on all facilities was capitalized.

Take-out finance was in place to refinance the first mortgage construction facility and second mortgage loan, if the properties were not sold prior to maturity of the loan.

Co-investors were repaid their principal prior to the maturity of the loan term and received a 20% return on the funds advanced.

next case study