Property Acquisition Recommendation

Transcription

1 Property Acquisition Recommendation INVESTMENT COMMITTEE - RECOMMENDATION FOR ACQUISITION PROPERTY: PREPARED BY: The Boulevarde, Toronto Brett Brookfield 1. THE PROPOSAL AND COMMERCIAL TERMS AGREED Description of Property 1189m 2 site in Toronto Acquiring Fund 35 Latitude Development Fund Key Terms Vacant Land P/P $520,000, 10% deposit, 12 wk. settlement terms The current owner (neighboring church) had previously proposed to subdivide the land, retaining the rear yards as additional car parking for the church, however have agreed to sell as the original parcel (1189m 2 ). 1

2 2. STRATEGY Strategy to maximize the value of the property o Land is Zoned R3 Medium Density, with a suitable (combined) frontage to unable medium density development under LMCC LEP & DCP. o Build 6 two story two/three bedroom townhouses Risk mitigation strategy o Current adequate size to enable 6 dwellings Exit strategy o sale of all dwellings, with verified superior sales in the immediate neighboring streets 3. SWOT ANALYSIS The property s Strengths, Weaknesses, Opportunities and Threats are as follows: Strengths o Comparable homes selling $450k + in suburb o Short level walk to local shopping, lake foreshore and café precinct Weaknesses o Townhouse development product currently on market & in design Opportunities o Maximize returns via offering a superior design and location Threats o Potential for additional developments to occur simultaneously 2

3 4. PURCHASE RESEARCH The subject land is located in an existing suburb which fronts Lake Macquarie, with redevelopment occurring in the apartment market. Existing comparative homes are selling for mid to high $400,000 s, with much older single level villas around the $400,000 mark. 3

4 Apartment style 2 bed product (lake views) are advertised in the high $400,000 s 5. FUNDING Based on the terms and conditions of the sale, the funds (excluding upfront due diligence costs) will be required as follows: Item Amount ($) Date Required Initial Deposit Stamp Duty & Solicitors Balance at Settlement Costs to Approval (estimate) $52,000 Immediate $24, weeks $468, weeks $52, weeks $596, DUE DILIGENCE We have chosen to be ultra conservative in our feasibility on this project to allow us to enter the market (if required) priced below comparative properties using below sales prices: Property Amount ($) 2 Bedroom, single garage, ensuite $430,000 3 Bedroom, double garage, ensuite $460,000 4

5 Based on our internal feasibility, we have calculated the following development costs: Item Amount ($) Pre DA Incl. Consultants $52,500 Post DA Incl. Council Contributions $132,500 Construction Costs $1,320,000 Agents & Legal $74,500 Finance Costs during Construction $40, SPECIFIC INVESTMENT OUTCOMES Based on our internal feasibility costings, we have calculated the following outcomes: Item Amount ($) Initial Equity Raising $725,000 Gearing GRV 60.5% ROE 30.75% IRR 12.66% Estimated Project Timeframe 24 mths 8. ADDITIONAL COMMENTS The subject property meets all council stipulated requirements for medium density development in the area, with development already occurring in the suburb to verify realistic sales outcomes along with demand for product. Our analysis suggests a mix of 6 three and two bedroom villas is achievable on the site. In our analysis we have allowed for an even split between three and two bedrooms, however if we are able to achieve a greater number of three bedroom townhouses our overall profit will incrementally improve. 5