FREMANTLE LOT 30 TREEBY ROAD ANKETELL WA 6167 COCKBURN CITY SHOPPING PERTH CBD AUBIN GROVE TRAIN STATION PROPOSED DISTRICT SHOPPING CENTRE SATTERLEY'S HONEYWOOD DEVELOPMENT LOT 30 TREEBY ROAD PROPOSED PRIMARY SCHOOL Level 6, 1 Nash Street, Perth WA 6000 1800 842 001 info@nexthorizongroup.com.au www.nexthorizongroup.com.au
THE PROPERTY The property is Lot 30 Treeby Road, Anketell, Western Australia 6167. The site comprises a vacant property totalling 4.8343 hectares. THE LOCATION The subject site is located within the City of Kwinana, approximately 35km south of the Perth CBD and 24km south east of the City of Fremantle. The property is surrounded by existing and planned amenities for shopping, recreation and lifestyle. These amenities include the Cockburn Gateway Shopping City, Fiona Stanley Hospital, Future Treeby District Playing Fields and Community Centre, and it is a 3 minute drive to the newly opened Aubin Grove Train Station and a 10 minute drive to the Cockburn Gateway Shopping Centre. LOT 30 TREEBY ROAD
INVESTMENT HIGHLIGHTS OVERVIEW This prime investment opportunity offers a 4.8343-hectare property zoned for residential development. The proposal is to purchase the subject site and develop a residential estate of circa 72 residential lots within the southern suburb of Anketell. The site is zoned Urban under the City of Kwinana Scheme. At this stage, we anticipate development to commence in late 2017 following receipt of Engineering Design approvals. Pre-selling of Stage 1 will commence when construction commences and it is anticipated that stage 1 lots will settle in early-mid 2018. It is envisaged that the overall project will be complete by late 2018/early 2019. SETTLEMENT DATE 60 days from signing of contract. The settlement date is 15 August. DEVELOPMENT MANAGER Next Horizon Group Pty Ltd ACN XXX XXX XXX. The Manager will provide the Management Services for the development of the project, including maintaining a reporting system that will provide the investor with information on a quarterly basis concerning the development management and investment performance of the project. The Investor/Buyer will be required to enter into a Project Management Agreement with Next Horizon Group Pty Ltd. The Manager is entitled to fees as set out in Section 7 for performance of these duties.
INVESTMENT HIGHLIGHTS (CONTINUED) EQUITY REQUIREMENTS Proposed minimum equity of $9,000,000 will be required to purchase and develop the Project. INVESTMENT TERM This investment should be considered short to medium term, with an anticipated Term of 18-24 months. INVESTMENT RETURN The forecast pre-tax return on the $9,000,000 investment is an Internal Rate of Return of XX%. The forecast distributions are expected to commence in mid/late 2018. PURCHASE DETAILS The purchase price is $3,636,364 + GST. Settlement is due 15 August 2017. PROPERTY ADDRESS The property address is Lot 30 Treeby Road, Anketell, Western Australia 6167. The site area of Lot 30 Treeby Road, Anketell is 4.8343 hectares. LOCATION The Suburb of Anketell is located within the City of Kwinana. The property is well located within close proximity to the Kwinana Freeway which allows a 20 minute commute to Perth by car. Trains to Perth and Fremantle are available from Aubin Grove Train station only 3 minutes away. The Kwinana Town Centre is also located 8km south.
MARKET SUMMARY The Perth residential property market has recently experienced an upturn after experiencing subdued market conditions for the past 18 months. According to the UDIA, the March 2017 quarter experienced a growth of land sales activity of 2.2% since the previous quarter. The number of lots on the market in the Perth metropolitan area has started to stabilise and increased 1.9% in the March quarter over the previous quarter. The UDIA report also states that the first home buyer end of the market seems to be holding up relatively well based on the number of grant applications for new dwellings by WA Treasury. For the 2016/2017 financial year there were 7,868 grant applications, down only 4.1% over the previous financial year. Grant applications for new dwellings for the last cycle peaked at 8,839 in 2015. A key reason for the continued first home buyer strength in the new home market is that the grants for existing houses have stopped and activity has moved to the house and land market. Grants for established homes have traditionally always been well in excess of grants for new dwellings. Lot 30 Treeby Road presently provides affordable housing for young and established families. The demand for this locality is expected to continue and expand as the stocks of residential land in Perth CBD are depleted and as housing costs in Perth CBD remain high. Upon analysis of land sales within the suburb of Wandi the following market data can be extrapolated: Honeywood Estate 425m2 - $315,000 Treeby Park Estate 460m2 - $285,011 The proposed development for the subject site allows for average lot prices ranging for a 450m 2 lot is $300,000 and a 300m 2 lot is $210,000. This price range we believe will compete favourably with other similar developments in the general area. ENGINEERING & ENVIRONMENTAL We have engaged JDSI Consulting Engineers to undertake investigations to ensure there are no known constraints to development which may have a negative impact on development costs and program. As the subject site is zoned for residential development and falls within an approved Structure Plan, we are confident that our development program will not be negatively impacted by engineering or environmental issues.
PLANNING The subject site is zoned Development Zone under the City of Kwinana Town Planning Scheme No. 2 and Urban under the Metropolitan Region Scheme (MRS). The subject site also falls within the Anketell North Local Structure Plan (LSP). The LSP was approved by the City of Kwinana and the WAPC in December 2015. Under the LSP the majority of the site is classified as Medium Density R30/R40 and Public Open Space. The site already has an approved WAPC application for 72 lots which will mean the first stage of subdivision can be bought to market as quickly as possible. The approved WAPC application plan can be found below:
PROJECT FEASIBILITY The purchase price for the englobo development site equates to $752,000 per hectare for Urban zoned land with an approved Structure Plan. We feel this value reflects very good current market value, and compares well with the adjoining 3.36 hectare development site which sold for $1,100,000 per hectare in 2015 and 3.98 hectare development site which sold for $1,017,590 per hectare in 2016. The forecast revenue is based on selling 72 residential lots ranging in size from 282m 2 to 553m 2. The overall average lot size is 355m 2. The pricing strategy is to ensure competitiveness with the broader market and more importantly the local market. Based on detailed market analysis we expect to realise sales prices ranging from $210,000 to $320,000. The average overall lot price is $255,069. The forecast sales rate ranges between 5 and 8 sales per month over the project life. We consider the selling rates to be achievable through quality estate presentation, involving project builders to market affordable house and land packages and low land prices. Allowing for Engineering design and approval we estimate Stage 1 construction will commence in late 2017 with Stage 1 titles issuing in April 2018. We have utilised the services of JDSI Consulting Engineers along with current market construction rates to determine civil development costs which have been implemented into the feasibility. Other costs include project management fees, planning fees, survey fees, landscaping costs, rates and taxes, marketing, sales fees, selling incentives and administration costs. CAPITAL STRUCTURE The capital structure for this project will comprise of $10,350,000. These initial costs include the deposit, acquisition of land, project management, appointment of consultants, construction, landscaping and marketing. DEVELOPMENT MANAGER Next Horizon Group is a boutique property company providing independent property consultancy Incorporating feasibility analysis, detailed due diligence, project delivery and a network of property professionals who are engaged to add maximum value to each respective project.
RISK FACTORS There are always risk factors associated with property investments of this nature. Some of these risks relate to the property and some to the economy. Those listed below are perceived by the manager to be the most relevant but this list is not exhaustive as there may be other factors. DEVELOPMENT COSTS & DELAYS The manager has made assumptions with respect to likely development costs and timeframes for development. Any variation to one or both will have an impact on the financial performance of the investment. MARKET CONDITIONS The value of any investment in real property is determined by the market at any particular point in time. History has shown that real estate values fluctuate. An investment such as this may be negatively impacted by the following factors: An escalation in development costs or unforeseen increases on project expenditure. Lot sales prices and sales rates are not achieved. Deterioration in macro and micro economic conditions including an escalation in interest rates. A downturn in the property market in general. A downturn in the Australian or West Australian economies. Engineering Approval for construction of residential lots, or any other applicable approval or consent being withheld by various government authorities causing development delay. REGULATORY CHANGES The introduction of new or amendment of existing legislation may have a detrimental effect on the property.
RISK FACTORS (CONTINUED) FINANCING AND BREACH OF BANKING COVENANTS The manager may obtain debt funding to complete the development of the property. The Bank will impose lending covenants that will include amongst other things a Loan to Value and Interest Cover ratios. In the event of a breach of any Bank covenant that is not remedied, the bank will have the right to take certain measures which may include but not be limited to, withholding income from the property, or in the most serious instances, the forced sale of the property. ADDITIONAL EQUITY Should the project not be successful in securing debt funding on favourable terms, additional equity maybe required to continue and complete the project. Raising additional equity may reduce the forecast return. ENVIRONMENTAL Whilst the property is currently considered to comply with all environmental laws there may be issues arise in the future which require corrective action or unexpected expenditure. GENERAL An investment such as this is subject to investment risk, including loss of income and capital. The manager does not guarantee the performance of the project or return of capital.
MANAGER'S FEES & CHARGES PROJECT MANAGEMENT FEE The Project Management Fee shall be 6.0% of the GST inclusive sale price of each subdivided lot. After settlement of the acquisition, the Project Management fee will be paid in advance of lot sales at a rate of $35,000 + GST per month. It is estimated this will occur over a 24 month period. The balance of any monies owed will be evenly distributed over the remaining months of the project or paid in full upon completion of the project. The fee arises as a result of the manager providing its services to undertake all necessary market research, ensuring all lots are developed and available for sale in a timely manner, negotiation and appointment of development consultants, negotiation with state and local government representatives in respect of development application, approvals and infrastructure, coordinate and oversee project sales and marketing and preparation of regular project reports on progress, cost budget and project issues. GST EXCLUSIVE Unless otherwise specified, the managers Fees are calculated by reference to amounts which are exclusive of GST. The manager is entitled to recover, in addition to the mangers fees, an amount equal to the GST payable by the manager in respect of taxable supplies made by the manager. More information about the project can be obtained by contacting Next Horizon Group.
Important Information: This document has been issued by Next Horizon Group Pty Ltd ACN xxx xxx xxx on the date specified on the front cover. This document is not a prospectus or a product disclosure statement and does not have to comply with the relevant provisions of the Corporations Act 2001 dealing with disclosure documents. This document is for the sole use of the recipient and may not be reproduced or distributed to any other person. If you have received this document from anyone other than Next Horizon Group, please return it to Next Horizon Group. All potential investors should read this document in its entirety, obtain advice from a suitably qualified professional advisor and make their own assessment of the investment before deciding to invest. This document does not constitute advice on legal, taxation and investment matters and does not take into account the investment objectives or the personal financial circumstances of any person to whom it is provided. Disclaimer: The information in this document is of a general nature and is a guide only. It does not take into account your individual circumstances. Before acting you should check the accuracy of the information and seek your own independent financial and legal advice. All projections and forecasts in this document are for illustrative purposes only. They are based on opinions of, and the assumptions of Next Horizon Group Pty Ltd as at the date of this document. Actual results may be materially affected by changes in economic and other circumstances. Any reliance placed upon the accuracy of projections, forecasts and other information provided in this document and the appropriateness of opinions, assumptions and qualifications used, is a matter for your own commercial judgement. No representation or warranty is made that any projections, forecasts, values, assumptions or estimates contained in this document can or will be achieved. Level 6, 1 Nash Street, Perth WA 6000 1800 842 001 info@nexthorizongroup.com.au www.nexthorizongroup.com.au